Exporters in Tirupur say the proposal to fix the minimum wage for contract workers at Rs 10,000 will hurt the industry. Tirupur is the biggest knitwear hub in India and exports knitwear garments to more than 100 countries. In 2015-16, it recorded Rs 23,050 crores in exports as against Rs 21,000 crores achieved in 2014-5 and is currently providing employment to six lakh workers directly, out of which 70 per cent are women.
At the all-India level, the share of Tirupur has gone up from Rs 12,500 crores in 2011-12 to Rs 23,050 crores in 2015-16 i.e. from 19.1 per cent to 20.72 per cent. However, the sector is facing a tough proposition in the global market due to lower competitiveness in certain areas such as bank interest, infrastructure, transaction cost, and power cost including labor wages.
Competitors have forged ahead. Vietnam has already signed an FTA with EU, which will come into effect from 2017 and is one of the member countries of the Trans Pacific Partnership agreement. Likewise, being a least developed country, Bangladesh enjoys a duty free status in the EU and Canada.
India too has the potential to enhance exports to the EU. The EU accounts for a chunk of the total exports from India. Of the total exports of $17 billion, the EU accounts for $6.29 billion.