Tiruppur exporters brace for slowdown, see demand dipping by 40%

After posting a 34 per cent increase in exports in 2021-22, India’s largest garment hub Tiruppur is staring at a 30-40 per cent dip in export demand this financial year, triggered by the economic slowdown in the United States and the Ukraine’s war effect in Europe.

While some units have shut down for short periods, the majority of them reduced total working days from seven to four or five and with only single shifts.

Tiruppur contributed around 54.2 per cent of the country’s textile exports last fiscal. A decline is expected in exports, despite making Rs 15,800 crore April to August, more than the last financial year. During financial year 2021-22, exports from Tiruppur increased to Rs 33,525 crore, up from around Rs 25,000 crore in 2020-21.

“Despite higher prices, there was an increase in demand during the first five months. Now, we are seeing a higher decline in orders for the coming months. We expect to see a 30-40 per cent decline in total exports for the year due to the ongoing global scenario,” said Raja M Shanmugam, president of Tirupur Exporters’ Association (TEA). Tiruppur’s peak period for export orders was expected to start from September.

According to TEA, the United States contributed to around 40 per cent of exports and Europe 35 per cent last year. “Raw material prices have increased, the war between Russia and Ukraine seriously affected the demand from Europe and the US economic slowdown situation is also causing trouble for advance orders,” said M P Muthurathinam, president, Tiruppur Exporters and Manufacturer Association (TEAMA).

According to manufacturers, the domestic market is also seeing a grim situation due to a consumption decline. “Total purchasing power is less in the Indian market. In addition, hitting our profits, yarn prices also increased from around Rs 220 per kg in 2020 to around Rs 400 per kg now,” Muthurathinam said.

Yarn mills are feeling the pinch too due to cotton prices. “Due to a dip in demand, the textile industry is not taking yarn and our stocks have increased. People are not ready to take stock. Similarly, higher cotton prices too is a cause of concern for us,” K Venkatachalam, chief advisor, Tamil Nadu Spinning Mills Association (Tasma). From around Rs 1 lakh a candy, cotton prices reduced to around Rs 75,000 a candy now, but is much higher than Rs 46,000 a candy during the beginning of 2021.

India is the world’s largest cotton producer, but it is sixth in garment exports. “The main problem is that the government is not giving priority to the micro small and medium enterprises. All the schemes are being lined up for big corporates. Unless our issues are addressed, we will be heading for bigger trouble with global demands down,” Muthurathinam said.