Rising input costs is denting prospects of textile exports

Rising input costs is denting prospects of textile exports

In spite of being a big producer of textile products, India’s market share in the global textile trade is less than its smaller neighbours like Bangladesh and Vietnam. While exports are growing in 2021-22, the rising cotton and yarn prices are a big concern for all exporters of value-added textile products. Raja M Shanmugham, President, Tiruppur Exporters’ Association (TEA), believes that the Union Government should device a mechanism so that the local industries do not feel the dearth of raw materials. In this interview with Rakesh Rao, Raja Shanmugham explains the challenges faced by textile exporters and how the government can increase the industry’s competitiveness.

As the President of Tiruppur Exporters’ Association (TEA), what are your priorities at present?

Right now, our priorities are to sustain the industry from the onslaught of Coronavirus & its impact and from the price escalations of all raw materials as well as all processes involved in the garment making.

How do you analyse the export performance of the textile sector in recent years?

The export performance in India from the last few years since 2017 is on the rough terrain due to the macro-economic interventions (demonetization and GST), followed by COVID invasion and its impact.

From Tiruppur perspective, we attained the turnover in the year 2019-20 of Rs 28,000 crores from export alone and equally the domestic sales too.

Unfortunately, due to Covid interventions and closures, we could register our turnover in the 2020-21 as Rs 24,000 crores exports and in the domestic sales too got dropped very badly.

Fortunately, in the current year, casual wear segments growth is visible across the globe. Hence, this year our annual turnover is inching towards Rs 33,000 crores and in domestic market too these casual wears demand is very much evident.

Unfortunately, this growth prospects got dented economically due to all round cost escalations on all inputs and services.

What are the key challenges before textile exporters at present? What more do you expect from the Union & State Governments to increase textile exports?

We are the leading cotton producing country. Despite that we have been misled by some vested interest groups to satisfy their ulterior motives. They act as a cotton trader and export the raw cotton to our competitors under the guise of protecting the farmers welfare, which is not at all true. Here, the Union Government needs to be alert by not allowing to get drain our precious raw material cotton to our competitors.

Of course, the Union Government needs to protect the interest of the farmers who are in the first leg of textile value chain. Equally, the Government needs to hand hold the garmenting sector – which is in the last leg of the textile value chain – that provides secured jobs to millions and millions of citizens of our country. Accordingly, the Union Government should safeguard the farmers through increased MSP route, at the same time the garment industry also needs a stability factor to sustain and grow itself in the international competition.

The government should lift import duty on cotton which is around 11%.

Cotton should be unlisted in the commodity list, because the vested interest group use this route to artificially escalate the market price to satisfy their ulterior motives.

Regarding cotton yarn and fabric exports, Union Government needs to device a governing mechanism so that the local industries do not feel the dearth of it.

Due to the continuous cost escalation for the last 15 months, MSMEs have got drained of their liquidity. Hence, the Union Government should to instruct all the banks to be liberal to support the required appetite of MSMEs to sustain and grow their respective businesses.           

What are the advantages offered by South Indian states (in general) and Tamil Nadu (in particular) to the textile exporters?

In the olden days, cotton was the main crop grown all-over in the southern India. During the British era, industrialisation happened and a lot of spinning mills got opened in this region. Since then, it started to be a dominating player in the textile industry. Furthermore, the Tamil Nadu Government’s industrial policies have been very conducive for the growth of textile-based export industries.

Tamil Nadu is aiming for $ 1 trillion state GDP (SGDP) by 2030. How important will the role of the textile industry be in achieving this goal?

Yes, Tamil Nadu is aiming to achieve $ 1 trillion GDP for which the textile industry is going to play a major role. For example, Tiruppur, which at present is the capital for knitwear produce of the entire country, is poised to grow speedily in the coming years once the Union Government provides its support as mentioned above.

Unfortunately, our contribution to the global market as of now is very pathetic as we hold less than 4% of the market share.

As requested, if the required policy measures are taken by the Union Government, definitely we can improve our share in the global market to 20% and above. Imagine if this happens Tamil Nadu’s Trillion-dollar GDP target would be attained very easily. Moreover, it would also help the country to reach its $ 5 trillion GDP target.       

Globally and nationally many changes are taking place (such as global companies’ China-Plus One policy, Govt of India’s PLI Scheme, MITRA Parks scheme, etc). What do these changes mean to textile exporters? Will these schemes help in increasing India’s share in the global textile market?

Yes, the post-Covid era has brought in a lot of new normal in all walks of our life. Moreover, the China has earned a bad repute due to their aggressive policies towards their neighbours and also due to the corona spread. Hence, a lot of global brands, which were hitherto concentrating on China sourcing, now want to reduce their dependency on them and are looking at other alternatives. India has a brighter chance to grab this golden opportunity.

Recently announced PLI scheme exclusively for the manmade fibres (MMF) and the MITRA parks scheme would definitely help to tap this golden opportunity. However, it all depends on how best this is facilitated by the government mechanism and how textile industries use these schemes.       

Sustainability is the buzzword today. How is TEA aiding textile companies’ journey towards sustainable practices?

Yes, the sustainability is a phenomenon that is resonating all across the globe. Fortunately, due to its hard learning on the pollution front, we Tiruppurian as a cluster embarked on self-correcting methodologies.

We got installed zero liquid discharge (ZLD) system, thereby ensuring no discharge happens in our processing units and, thus, protecting the environment effectively. Due to this practice, we recycle the water used for processing daily to the tune of 100 MLD which ensures water conservation in a big way.

The Tiruppur cluster’s connected electricity load is around 250 MW and the entire Tiruppur district’s connected load is around 600MW. But, we Tiruppurian got installed around 2000 MW of green energy through solar & wind turbine and got it connected to the state grid.

In the past, we were blindly using wood logs to burn our boilers and were partly responsible for deforestation. To increase green cover in the region, we started with the support of a few NGOs to afforest Tiruppur. So far, we have planted and nurtured more than 1 million trees across this region. We are still continuing with this program to add more numbers in the coming months and years.

With these measures, Tiruppur can attract global brands who are talking about eco-friendly processes and sustainability.   

Would you like to give any message to the industry?

My message to the industry is that we have to showcase our strength on quality & timely delivery and make our facility a preferred one to the global brands.

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