Coronavirus outbreak in EU worries Tiruppur industry

The outbreak of the deadly coronavirus in Europe threatens to bring the already suffering knitwear industry in Tiruppur to its knees. Most buyers from countries like Italy, Germany and Spain severely hit by the virus have either asked manufacturers here to “put on hold” the delivery of garments or have dropped hints of cancelling them.

Europe is one of the most promising markets for Tiruppur manufacturers along with the US and the outbreak of the virus there will have a “huge financial impact” on the multi-crore industry that accounts for 46 per cent of India’s exports in the sector, insiders say.

The industry has been facing problems ever since the outbreak of Coronavirus in China early January as consignments of raw materials from that country got delayed – 80 per cent of accessories used in apparels are imported from China.

Just when the situation seemed to stabilise vis-à-vis China, the virus spread to Europe, a key market to which Tiruppur manufacturers’ export apparels worth Rs 1,500 to Rs 1,600 crore every month. The total exports in 2018-19 were Rs 26,000 crores.

“The industry is in a perplexed state as the epicentre of the Coronavirus shifted to Europe. The outbreak of the disease and virtual lockdown of several countries pose a major challenge for our industry. Markets have been totally evacuated in Europe and the music is being faced by us here,” Tiruppur Exporters’ Association (TEA) President Raja M Shanmugham told DH.

A leading exporter, whose key market is Europe, admitted scaling down of orders by his buyer. “While my buyer has asked me not to ship the finished goods, he has also instructed me to put on hold new designs that have been approved already. The problem has just begun. Almost everyone who exports to Europe is facing such issues and we only expect the problems to increase as there is no sign of immediate recovery,” he told DH.

Shanmugham said the delay in payment from the buyers, which would be more than two-three months due to the outbreak of Coronavirus, would put exporters in a precarious situation as most of them borrow from banks to run their business.

He also shot off a letter to Finance Minister Nirmala Sitharaman on Monday, detailing the problems faced by the industry due to the “extraordinary” situation and asking her to advice banks not to categorise the units as NPAs for no repayment of loans and provide at least six months’ moratorium to help the units to sustain in the business.

“The stimulus financial package measures are also required to reenergize the market economy. The quantitative easing methodology is required at this hour of crisis to revive back the economy and uplift the business confidence of entrepreneurs,” Shanmugham said.

The TEA president, explained to DH, that the problems would only compound in the coming weeks as the market is likely to be disrupted for the next two months. “Even if it opens after two months, the fear psychosis would remain there for some time. If the orders get cancelled in large quantity, the financial loses would be very big in number,” Shanmugham said.

The multi-crore industry is already facing a slew of challenges like heavy competition from neighbouring countries like Bangladesh, Cambodia, Vietnam and Sri Lanka whose products are preferred due to their “low price.”