The recession-hit garment industry in Tirupur, the knitwear capital of India, is hoping for a turnaround within six months. Tirupur Exporters Association (TEA) president A Sakthivel, who is also the president of Federation of Indian Export Organisations (FIEO), spoke to FE’s Joseph Vackayil about the steps being taken to be a prominent player when the EU and the US economies recover, and about the fiscal, financial and investment support the industry expects from the Centre. Excerpts:
•What steps are being taken to spin off a new beginning for the garment export industry?
The industry will certainly bounce back once the financial situation improves in the US and the EU markets. At the shop floor level, we are taking many steps. We are exploring the niche markets for garments made of organic cotton and wish to have 10% of Tirupur export share. Also, to increase the overall market share in the world market. The units are trying to reduce the cost by implementing latest concepts and systems to sustain in the global market. Much importance is being given to training inorder to enhance the productivity of both men and machinery. Efforts are being made to diversify from cotton that caters to the demand only in the summer season, to other fabrics and tap all-seasonal markets. Under the aegis of Apparel Export Promotion Council, a knitwear technology mission is being set up in Tirupur that will have a design studio, research and development centre, chemical processing department, eco Lab, fabric information, garment development department, consultancy services and transfer of technology for increasing the knitwear exports. We are also venturing into synthetic garment exports.
•What support is expected from the Centre for the industry to face the slow down and be globally competitive.
We expect a very tangible support from the Centre and the textile ministry. Separate memorandums and requests have already been submitted. The major requests relate to favourable changes in the direct taxes like five-year tax holiday from paying income tax, allowing TDS expenditure irrespective of date of payment, enhancing the depreciation rate from 15% to 20% and exemption from the payment of fringe benefit tax on all expenses related to exports.
Under indirect taxes, TEA wants waiver of service tax, service tax on foreign agency commission, duty-free import of man-made fibre and textile processing machinery. The exporters also want compensation of 3% against the state levies like octroi & transaction cost and 5% increase in duty drawback rate from the present 8.8% ?to have a competitiveness in the global market. We also look for packing credit at 7% across the board, a two-year moratorium on repayment of term loan and interest rate because of the reduced orders and delay in getting the payments from the buyers. We have also sought central support for our environmental projects and other infrastructure development programmes.
•Where do you place knitwear in Indian textile production, domestic sale and export
Knitwear production contributes 25% of India’s total apparel production. The domestic knitwear sale is about Rs 15,000 crore. In the readymade garment exports, the share of knitted garment quantity-wise and value-wise is 55% and 40%, respectively. Of the total readymade garment export value of $10.13 billion, in 2008-09, contribution of knitwear garment was $4.5 billion.
•What was the impact of the global recession on employment and export
The impact was very bad. Over 30,000 employees lost their jobs and export also declined by 10% to the major markets in countries like USA, EU, Canada etc. We feel the recovery will be gradual and increase in exports will start from July 2009 onwards.
•Are you looking for alternative markets?
Yes. The exporting units are exploring the South America, Africa and West Asia nations. We are focusing on organic cotton and also synthetics.
•How does Tirupur stand out among the other production centers in the country or in Asia. What is its unique selling point.
The USP of the Tirupur exporting units is their readiness to take even small orders and put efforts to ship them in time with no compromise on quality.
•Has the recession hit the modernisation and expansion drive?
There was continuous modernisation till 2007. Thereafter, due to adverse factors like unprecedented appreciation of rupee against dollar and global economic crisis, there has been a slowdown. However, we have been able to set up the first apparel park in the country, the Netaji Apparel Park. Over 50 units are operating employing more than 15,000 people. A fashion institute, NIFT-TEA Knitwear Fashion Institute, with the support of the National Institute of Fashion Technology, was established in Tirupur in 1997. NIFT- TEA, in collaboration with the Indo-Italian Chamber of Commerce, did organise many workshops on fashion design, fashion forecasting, marketing etc.
There is no question of any capacity expansion at present. We may consider as the situation improves.