Feedback Here

fbook  tweeter  linkin YouTube
Global contents also translated in Chinese

Economic slowdown, Ukraine war spirals down on Tiruppur garment hub


Economic slowdown Ukraine war spirals down on Tiruppur garment hub

Tiruppur, the fifth largest city in Tamil Nadu and India’s main knitwear hub, contributes about 90 per cent to knitwear exports. Standing strong, this city has experienced many challenges in the past but has emerged stronger than ever – from the global financial market crash in 2008 and the Chennai High Court ruling against the city’s effluence dump into river Noyyal in 2011 to the government’s demonetization of bank notes in 2016 and the pandemic in 2020-21. Tiruppur has seen it all.

However, in 2022, it is hurting at the core. As soon as markets started reopening post-pandemic, the manufacturing hub got a blow with escalating yarn costs. For example, 30-count yarn typically cost Rs 220 per kilo but since April 2022 costs Rs 440 per kilo! This resulted in the multitude of MSMEs in Tiruppur curtailing purchase of yarn from mills and their own production lines, as they were unable to meet the expectations of foreign importers.

Raja M Shanmugam, President, Tirupur Exporters’ Association (TEA) confirmed the critical situation by stating that whilst factories ran eight hour shifts six days a week earlier, now most run four to five hour shifts and that too on alternate days. Some units are now running only four days week whilst some have temporarily suspended operations. Shanmugan estimates the decline during summer of 2022 was 40 per cent.

Government steps in

Assessing the seriousness of the looming fiscal crisis which will hurt the state, chief minister MK Stalin has requested the PM to provide fiscal aide to tide over this challenging period. Stalin pointed out due to the Ukraine war and the impending recession that is about to hit Europe and later in 2023 US, importers from these regions have become conservative with their new orders as their existing inventories are stockpiled with previous imports. He reiterated the interest of the state government to not let this successful industry fall apart over this temporary crisis and the central government can help avoid it. Stalin was confident Tiruppur’s resilient nature would see the hub weather this storm too.

Impact on the domestic front

Established domestic brands such as Lux, Amul and Dixcy that manufacture knitted innerwear and outerwear worth Rs 10,000 crores are currently dealing with a slow-moving inventory. However, that has not deterred the Rs 2,300 crore innerwear king Lux Industries to turnover its flagship brand Lux Cozi from Rs 700 crores to Rs 1000 crores by 2025. The brand has seen an uptake on e-commerce platforms such Myntra, Flipkart and Amazon – from Rs 5 crores in 2020 to Rs 8 crores in 2022. Saket Todi, Executive Director, Lux Industries stated that the company is experiencing around 12 per cent growth annually. Lux Industries is now eyeing the untapped and lucrative market for boys’ innerwear.

A silver lining

Meanwhile, latest media reports suggest, orders from global brands like Primark and Walmart have started to come in for garment makers in Tiruppur. This, after three months of continuous slide from global markets as their prices have become competitive due to fall in cotton and yarn prices.

Experts say, competing countries like Vietnam, Thailand and Bangladesh have been quoting much lesser prices compared to India. Indian exporters were facing problems over rising cotton and yarn prices in the domestic market and small and medium units who are into garments exports suffered from a liquidity crisis.

As per Subramanian, export situation has started improving a little with yarn prices in India have dropped 10-15 per cent and this benefits India more. Currency depreciation is also in India’s favor. So, there is optimism with big global brands placing orders. Tiruppur has 3,000 garment manufacturing units that employs 18 lakh people. The annual exports of Tiruppur are in range of ₹33,000-35,000 crore.


VF Logo