Despite shipments surging over Rs 33,000 crore in FY22, the future ahead looks tough for knitwear exporters in Tiruppur as raw material prices have increased due to the pandemic outbreak. As per the Tiruppur Exporters’ Association, in the last 18 months, prices of cotton yarn increased steadily alongwith accessories prices. MSMEs in Tiruppur are being compelled to execute their orders on increased prices, despite incurring losses or getting a wafer-thin margin.

Exporters demand new schemes

Raja M Shanmugham, President, TEA says, the crisis needs to be addressed on a war-footing. The Centre needs to announce a new scheme like ECLGS to allow MSMEs to avail additional credit facility of 10 to 20 per cent of existing limit, he adds. Knitwear exporters in Tiruppur are being compelled to complete committed export orders for the same price of garments, as buyers are not inclined to increase prices. Exporters are also facing a decline in the quantity of orders being placed compared to the corresponding period of last year.

Training workers to match global standards

Currently employing 600,000 workers, Tiruppur directly houses the most number of women entrepreneurs, and migrant workers from north and northeast. The city contributes about 60 per cent of total knitwear exports from the country and exports only cotton based garments. This offers it ample scope to increase its share in the global market by focusing on value added and synthetic products, adds Shanmugham.

The association plans to construct 100,000 houses for its garment workers. This would enable laborers to shift permanently from their home villages to these industrial clusters. The houses will have all required amenities, says TEA. The association is also training existing laborers to compete with global players like China, Korea, Bangladesh and Vietnam. It is seeking the Centre’s help to upskill workers to match global standards. Its primary goal is to enhance current exports’ turnover to around Rs 1 trillion in another two to three years, adds S Sakthivel, Executive Secretary, TEA.

Its boom time for landlords across malls and high streets as, after a two-year hiatus, rental rates are again increasing almost 15-25 per cent. Mall operators expect rental collections to reach pre-COVID levels in 2022-23, says Yogeshwar Sharma, CEO, Select Citywalk, one of the most popular malls in New Delhi. In fact, encouraged by response, some mall owners even plan to increase rentals by 5 per cent every year instead of a combined 15 per cent after three years, he adds.

During the last two years, retailers saved nearly 20 per cent of their annual lease due to rent concessions offered by mall owners. However, with retail sales outpacing pre-COVID levels, they expect rentals to surge again. Operator of several malls in the NCR, DLF Retail has already increased rents 15 per cent. In case of lease renewals, rents have been increased 20 per cent while for new tenants they have been increased 25 per cent, says Pushpa Bector, Executive Director.

Retailers plan expansion to ease margin pressures

For retailers, rents form almost 10 to 15 per cent of their monthly sales. High rentals compel them to make maximum utilization of retail spaces. Now, with rents expected to rise again, they expect profit margins to come under pressure. To resolve this, retailers plan to expand their product categories. This also enables them to control price hikes in offerings. With a dip in COVID cases, retailers expect growth in the March quarter to reach double-digits. They also expect to expand their retail spaces after almost two years.

Leasing to soar past COVID-levels

For retailers, apart from rentals, prices of fuel and other raw materials have surged significantly, affecting overall costs. Yet, many do not plan to increase product prices as it would affect current consumptions, trend, explains Devarajan Iyer, CEO, Lifestyle International. Real estate investment firm CBRE expects leasing in India to soar past pre-COVID levels to 5.1 million sq. ft. this year. This could also boost new store openings by around 25 per cent in 2022 compared to previous year, indicates the firm’s report ‘Real Estate Market Outlook 2022 – India’.

Texbrasil (Brazilian Textile and Fashion Industry Internationalization Program) — result of a partnership between Abit (Brazilian Textile and Apparel Industry Association) and ApexBrasil (Brazilian Trade and Investment Promotion Agency), – has opened a new pop-up store in Dubai in partnership with the Fashion Jardimin anticipation of summer in the region, which begins in June.

The event will feature brands Aqua de Coco, Barthelemy, Blue Man, Empress, Karla Vivian, Nhall, La Sirene, Triya, Shorts & Co and Oasis, which are sold exclusively by the store. It will take place at the Gate Village mall, in the city’s Financial Center. The celebration of Brazilian fashion will also feature a fashion show with brand launches, in addition to the presence of celebrities, digital influencers, customers, local and national press.

Capacity expansion in the spandex market will peak in 2022 after experiencing prosperous cycle. Many new units will be launched in Q2. Supply of spandex may extend longer. The pandemic will impact the production, consumption and logistics.. Downstream production is expected to apparently recover after the spread of pandemic is eased. Some demand in Q3 may be pulled forward. Price of spandex 20D and 30D is estimated to extend lower after new units started production while downstream demand is anticipated to be hard to rise.

Supply of spandex turned to be longer in the first quarter of 2022 after being tight in 2021.The spandex capacity increased by 4.1 per cent to reach 1014.5kt/year at the end of first quarter in 2022.Price of spandex extended lower since Q4 2021 with cautious downstream procurement and increasing supply. The average operating rate of spandex plants declined to around 88.1 per cent in Q1, down by 3.2 percentage points compared with Q4 2021 and 6.9 percentage points on annual basis respectively. Some spandex plants cut more production near the Lunar New Year’s holiday with rapidly reducing spandex price and some plants in North China suspended production affected by the XXIV Olympic Winter Games in Beijing.

Representatives of the Southern India Mills’ Association (SIMA) plan to urge Tamil Nadu Government to increase cotton production by introducing best seed varieties.

Simaplans to urge the government to increase production from four lakh bales to 15 lakh bales a year. M Ravi Sam, Chairman, says, it will urge for better varieties of cotton seeds to be used to increase production by 40 per cent.

The Confederation of Indian Textile Industry (CITI) thanked the state and Union governments for removing import duty, and agriculture and infrastructure development cess, to bring down the skyrocketing cotton prices.

T Rajkumar, Chairman, CITI says, the cancellation of import duty will deter traders, who have hoarded cotton expecting an increase in price. This will lead to a decline in yarn prices within a month. India’s cotton imports will surge to around 30-35 lakh bales before the end of the relief period in India, he adds

The economic crisis in Pakistan and Sri Lanka is boosting prospects of the India market as the industry is expecting more orders to India, an industry insider said.

Garment unit owners believe, the decline in cotton prices will be reflected in yarn prices will also decline in the next few days.

Vishal Fabrics plans to add another facility to manufacture 10 million meter of denim fabrics per annum in H2FY23. The company recently added another facility to manufacture 10 million metre of denim fabrics per annum. Currently, it has eight denim manufacturing facilities with an annual capacity of 80 million metre per annum. The two new facilities will boost its annual capacity to 100 million metre per annum at Dholi Unit.

Total investment in this project will be Rs 30 crore and funded by internal accruals. It will ramp up production of denim fabric without incurring any additional costs for any other process/machinery. The two new facilities will also help Vishal Fabrics to cater to domestic and export demand for denim fabrics.

Brijmohan Chiripal, Managing Director says, these investments will lay the groundwork for the company's next phase of expansion. They will enhance its market reach and grow share in the global denim segment, he adds.

The sudden surge in policy rates to 12.25 per cent by the State Bank of Pakistan may cause a decline in its Pakistan’s value-added textile sector, says Shahzad Azam Khan, Central Chairman, Pakistan Hosiery Manufacturers & Exporters Association (PHMEA). It would also have disastrous effects on the economy, industry and exports, he adds. The enhancement in Export Finance Schemes rates to 5.5 per cent will impact exporters’ efficiency and increase liquidity pressures, he adds.

Already troubled by liquidity crisis and other financial challenges, the domestic industry will be devastated by the sudden increase in policy rates, feels Khan. He has urged Prime Minister Shahbaz Sharif and his economic and financial team to take heed to the demands of the business community and reverse the policy discount and EFS rates. Khan has also urged the new government to stick to the “Charter of Economy” for the country’s future development.

The removal of import duty on cotton has encouraged many spinning mills in Tiruppur to place work orders in the US and Australia though few mills would prefer to monitor the price decline before placing their orders. MP Muthurathinam, President, Tiruppur Exporters and Manufacturer Association says, the decision may lead to drop in cotton yarn prices by Rs 10-20 a kg, encouraging garment mills to sign deals with foreign buyers.

N Thirukumaran, Managing Director, Ess Tee Exports explains, the Centre’s decision will help cool yarn prices and stabilize the cotton market. It would also enhance India’s competitiveness with other Asian countries, adds Velmurugan Shanmugham, Managing Director, Jayalakshmi Textiles. K Venkatachalam, Special Advisor, Tamil Nadu Spinning Mills Association (TNSMA) opines, the removal would help imports to stabilize cotton prices at around Rs 88,000 in a few weeks.

T Rajkumar, Chairman, Confederation of Indian Textile Industry (CITI), and Ravi Sam, Chairman, Southern India Mills' Association (SIMA), hope, the removal of import duty on cotton would help stabilize yarn prices from May. This year, India is estimated to have produced around 340 lakh cotton bales. However, spinners are expected to receive around 325 lakh only, say Rajkumar and Sam. They also fear production has declined by 45 lakh bales from previous year due to cancellation of export orders.

India's share in US bedlinen exports is estimated to have dropped from an average of 55 per cent in 2021 to 44.85 per cent in the month of January 2022 only. Meanwhile, Pakistan's share increased to 25.71 per cent while China’s surged to 19.37 per cent during the same period. This led to the industry demanding removal of import duty on cotton. Industry leaders are also encouraging farmers in other states including Tamil Nadu to cultivate extra-long staple cotton of 36 mm.

To be introduced from January 15, 2023, the Mexican Standard NOM-004-SE-2021 will standardize all commercial information required for labeling and apply it to textile products and items, clothing, accessories and household linen having textile composition equal to or greater than 50 per cent in relation to its mass. All products within the territory of the United Mexican States will be covered by the new standard even if they contain plastics or other materials. This new standard will replace the old NOM-0040SCFI-2006. It was published in the official Gazette of the Federation on January 14, 2022 by the Ministry of Economy.

The standard mandates, garments, their accessories and household linens must display trademark, description of materials, size of garments and accessories, care instructions, country of origin and name of the person responsible for the product on one or more permanent labels placed at the bottom of the neck or waist. For textile products, the standard mandates all commercial information should be presented in Spanish. It needs to be truthful and not mislead customers about the nature and characteristics of the product, adds SGS said on its website.

Further, product’s packaging must indicate its name and the quantity of products contained. While describing materials, industry leaders should use generic fibre names in accordance with Mexican Standards NMX-A-2076-INNTEX-2013 and NMX-A-6938-INNTEX-2013.. Any fibre present in a percentage of less than 5 per cent of the total may be designated as ‘others”; or ‘other fibres’ by the standard.