Bangla on boil, Tiruppur looks to sew up knitwear deals

The political unrest in Bangladesh could turn out to be a blessing for Tamil Nadu’s Tiruppur, India’s knitwear hub, which contributes to almost 55 per cent of the country’s exports in the sector.

Top apparel brands from the US and Europe, two largest garment buyers in the world, have touched base with exporters in Tiruppur, as they look beyond turmoil-hit Bangladesh to secure their supplies even as concerns remain whether the existing infrastructure in the town can handle the potential orders that may flow its way.

Tiruppur may be able to achieve at least Rs 40,000 crore in knitwear exports in the 2024-2025 fiscal, which is Rs 5,000 crore higher than Rs 34,350 crore clocked in the 2022-2023 fiscal, with more orders. In the 2023-2024 fiscal, exports dipped to Rs 30,690, while the figure for exports between April and August 2024 is Rs 14,579 crore.

‘Tiruppur to witness further boom’

The value of exports from Tiruppur would only increase in the coming months, with several top brands such as Walmart, GAP, Costco, Marks & Spencer, Primark, and C&A appointing third-party auditing firms to assess the capacity and capability of exports units in Tiruppur to handle additional orders. Popular baby clothing brands like BB Baby, Honest Baby Clothing, and Monica + Andy are also scouting for buyers in Tiruppur.

The 35 per cent increase in terms of value in the overall ready-made garment exports in October compared to the same period in 2023 hands out much-needed confidence to the sector, which suffered a serious setback during the Covid-19 pandemic.

“Several top buyers from the US and UK appointing firms like SGS and BV for audit of export units in Tiruppur is the first step towards global brands placing more orders from us,” Tiruppur Exporters Association (TEA) President K M Subramanian told DH. “While some firms are already delivering additional orders, we will definitely witness further boom in the sector.”

Exporters’ increasing their efficiency, constant improvisation in product quality, and the environment friendly measures adopted by firms in pursuit of a carbon-neutral Tiruppur by 2030 could also come to their advantage as many US brands focus on sustainability, Subramanian said.

A leading exporter said several buyers have touched base with existing and new suppliers for additional orders due to the crisis in Bangladesh.

“Some are already supplying orders for Christmas and New Year in the US and European markets. The volume will increase for sure in the first quarter of 2025 when brands go for new designs. The political crisis in Bangladesh, which shows no signs of resolution, will certainly force large players to come to safer places like India (read Tiruppur),” he said.

The “soon-to-be-signed” Free Trade Agreement between India and the UK, which will allow buyers from that country to export garments from here without paying an additional 11 per cent duty, is another factor that is expected to open more avenues for exporters’ in Tiruppur and increase their competitiveness.

‘Difficult for MSMEs’

While the outlook looks promising, exporters, however, flag that the existing infrastructure in Tiruppur won’t be sufficient enough to handle even if 5 to 10 per cent of orders get diverted from Bangladesh.

Exporters who deal with large volumes can manage to cater to additional orders by quickly scaling up their existing capacities or opening new factories, but those falling under Micro, Small, and Medium Enterprises (MSMEs) won’t be able to handle the additional orders due to a slew of factors.

K G Ganeshan, partner, Swellknit Inc, told DH that while the utilisation capacity at large factories are between 90 to 95 per cent, the same is around 50 per cent in units that are categorised as MSMEs.

“Shortage of skilled labour is a major problem for MSMEs and firms that depend on job work units won’t be able to meet the quality expected by big players from US and the UK. The existing infrastructure won’t help us take advantage of the situation in Bangladesh,” he said.

‘Government should ensure social infrastructure’

Subramanian said the government should come up with more subsidies and reduce tax rates for the sector besides enhancing infrastructure by building textile parks with plug ‘n’ play facilities, besides focusing on skilling migrant labourers who form the backbone of the sector.

Raja M Shanmugham, Partner, Warsaw International, said the government should focus on putting in place the required social infrastructure in Tiruppur if the cluster has to benefit from the ‘China plus one’ strategy of large companies and the Bangladesh crisis.

“We need to have proper systems put in place if we have to satisfy the buyers’ appetite. The exporters, the state government, and the Centre should work together in ensuring housing infrastructure for the labour force, most of whom are migrants,” Shanmugam, past president of TEA, said.

“The garment sector in Bangladesh, Cambodia, and Vietnam grew due to unflinching support and vision from their respective government and we expect the same in India,” the leading exporter added.

Acknowledging that MSME export units will have difficulties in gaining from the development, Subramanian said the government should ensure enough subsidies and reduce tax for the sector besides enhancing infrastructure by opening parks with plug ‘n’ play facilities.

“We are already known for quality and once companies come to Tiruppur, they will not go easily. And we should ensure more firms flock to this cluster,” he added.