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.