Tirupur is known as Dollar City of Tamil Nadu. Tirupur’s role is important in providing employment opportunities to people from other towns of Tamil Nadu and workers from other states coming to Tamil Nadu. Annual textile production worth Rs.60,000 crore takes place in Tirupur.
Tirupur, which has been producing Kolachi for decades, has been facing a steady decline for the past few years. Most of the companies in Tirupur have temporarily suspended their garment production due to rising prices of raw materials and shortage of orders. What is happening in Tirupur textile industry?
The decline started with demonetisation
Muthuratnam of the Tirupur Exporters and Manufacturers Association says that only 30% of the work is being done in Tirupur.
He says that it would not be correct to say that the textile industry started to decline only after the corona lockdown.
“90% of Tirupur’s textile market is MSMEs. Ever since demonetisation, MSMEs have started to decline.
Since then, the already weakened textile sector has faced many more crises after the implementation of GST. The Corona lockdown accelerated this decline. “India’s contribution to international exports has also started to decline,” says Muthuratnam.
In 2017, India ranked 2nd with a contribution of 5% in global textile and apparel exports. Since then it has gradually declined to the 6th position in 2020. China continues to be number one.
“Even though the value of textile exports is high due to inflation, the volume of exports remains low. In the current situation, already 50% of MSMEs have completely stopped production. Cotton prices have reached an all-time high this year.
“So most of the manufacturers have started switching to polyester garment production. Cotton garment production has fallen by 20%. Similarly, imports from Bangladesh are increasing. There is no duty to import from Bangladesh. Domestic sellers are also choosing Bangladeshi garments because of lower prices. Garments made in China via Bangladesh are also sold to India. are coming to the market,” said Muthuratnam.
Muthurathnam says that due to the crisis in the Tirupur textile industry, India’s contribution to international exports has started to decline.
Exports plunged by Russia-Ukraine war
Shaktivel, secretary of Tirupur Exporters Association, says the Russia-Ukraine war is also the main reason for the decline in India’s exports.
He says that 70% of India’s textile export market is in the US, European Union and Britain, and says that those countries have stopped importing clothes because the Western market is facing severe financial crisis and price hike due to the Ukraine-Russia war.
“In the current financial year, readymade garment exports fell to Rs 8,141 crore in October from Rs 12,000 crore in April. This is a 14% decline over last year’s exports.
At the same time, knitwear exports fell from Rs 3,298 crore in April last year to Rs 2,165 crore in October. This is a 35% decline over last year’s exports.
“It is true that the import from Bangladesh is increasing every year. So we don’t need to worry. The value of textile imported from Bangladesh this year is Rs. 5,000 crore. At the same time, Bangladesh is the leading importer of cotton and yarn from India. That should also be taken into consideration. Bangladesh Imports will not pose a major threat to domestic production,” says Sakthivel.
China, Bangladesh and Vietnam are major importers of cotton and yarn from India. But in the last five years Bangladesh and Vietnam have overtaken India as the 2nd and 4th largest textile exporters.
The cotton market should remain stable
This year, the price of a candy (355 kg) of cotton has crossed Rs 1 lakh. The duty on cotton imports was temporarily abolished following the demand of the Panchalas to bring the price of cotton under control. But cotton prices have not come down as much as expected, says Jagadish Chandra, secretary of the South Indian Spinning Association.
Speaking to BBC Tamil, he said, “Cotton production is predicted in advance every year. But last year, this prediction was wrong. Cotton was exported instead of domestic demand. That’s why there was a huge shortage. A candy cotton is currently sold for up to Rs 75,000.
“It is predicted that 360 crore bales of cotton will be produced this year. The current yield is in line with that. We requested that the government should allow exports only after ensuring the availability for domestic demand. But the government is reluctant to ban exports. A crisis like last year should not occur this year,” he said. .
Jagadish Chandra, secretary of the South Indian Spinners’ Association, said cotton prices have not come down as much as expected
Impact due to power price hike
The Tamil Nadu government had announced a few months ago that the electricity tariff would be increased, which had caused dissatisfaction among the industrialists.
“Currently the cost has increased by up to 25% due to the new electricity tariff. Jagadish Chandra says that the announcement that the electricity tariff will be increased every year will severely affect the industry.
Power looms without electricity charges
Power looms operating in Coimbatore’s Tirupur districts have not paid the electricity bill since the announcement of power tariff increase, says Bhoopathi, Treasurer of the Power Loom Owners’ Association.
“Already less than 50 percent power looms were working. 20% power looms have gone to scrap. In this situation, the increase in electricity tariff by Rs. 1.50 per unit has severely affected the power looms. We have already decided that we will not pay the increased electricity tariff.
“That’s why electricity bills have not been paid for two months. Now garment manufacturing companies have also temporarily stopped supplying cotton yarn. The salary increase agreed last February has not been fully paid. We have requested the government to cancel the electricity bill hike. We are also going to meet the Chief Minister in person,” he said.
Export needs attention
For the last 15 years, India has contributed only 4% to the global textile exports. But India is the largest producer of cotton in the world. Muthu Rathanam says we need a new policy for textile production.
“Cotton production is also high in India. We have enough human resources and technology. But Bangladesh and Vietnam, which are smaller than us, are struggling in textile export. The reason for this is that the Indian government does not have a clear policy. The Indian government should work with the Tamil Nadu government to create a new policy for textile export. Cotton in Tamil Nadu Production should be increased,” said Muthuratnam.
45% of the panchalas in India are in Tamil Nadu. Tamil Nadu requires 120 crore bales of cotton per year. But only 6 crore bales are produced in Tamil Nadu. The textile sector is demanding to promote and increase cotton production in Tamil Nadu.
What is the Tamil Nadu government doing?
Speaking to BBC Tamil, Tamil Nadu Textiles Minister R.Gandhi said that the central government should control the price of cotton.
“We have told the central government that the 11% import tax should be canceled permanently. As far as the increase in electricity tariff is concerned, it has been done as per the rules of the central government. Even then, the electricity tariff hike has been implemented so as not to affect the people.
“Cotton production in Tamil Nadu has been decided to be handled by the textile department instead of the agriculture department. Two commissioners have been appointed instead of one commissioner for the textile department. At present, 10 lakh bales of cotton are produced in Tamil Nadu. It is planned to increase this gradually. There is also a plan to start a Tamil Nadu Cotton Corporation like the National Cotton Corporation. After the financial situation stabilizes, that too. will be created,” Gandhi said.
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