Exporters in Tirupur feel schemes like the MEIS (Merchandise Exports of India Scheme) are necessary till such time as free trade agreements, say, with the EU, are signed. They are reacting to a viewpoint that industry and export councils should stop depending on crutches of subsidies and grants and strive to be self-reliant on their own. They feel scrapping subsidies given to the readymade garment sector will lead to reduction of their competitiveness in the global market and that once buyers leave a country and settle in with a competing country it would be very difficult to bring them back.
Nearly 80 per cent of knitwear garment exporting units in Tirupur are small and medium sized units. They face higher logistics cost and increasing wages compared to competing countries are deterrent factors in enhancing their competitiveness. They feel subsidies like MEIS offset infrastructural inefficiencies and provide a level playing field.
India competes with the likes of Bangladesh, Vietnam, Cambodia, Ethiopia, Myanmar and Sri Lanka, which enjoy duty free status in the European Union. The garment sector in India provides employment to the downtrodden and 60 per cent of workers are women. The fortunes of cotton farmers are also linked to this industry.