Tamil Nadu town that's driving India's garment sector

After a sharp decline, exports from the textile town of Tirupur have bounced back. The town in west-central Tamil Nadu, 50km from Coimbatore and 460km from Chennai, has reported a 10 per cent growth in order flow in the past two months.

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Exporters from the textile hub have told the Union Minister of Textiles that they will clock around Rs 15,000 crore (Rs 150 billion) in 2013-14, an increase of 15-20 per cent over last year. The Union ministry has already raised the annual export target to $43 billion (Rs 25,750 crore) from $36 billion (Rs 21,500 crore) last year for the apparel industry, as part of a plan to leverage the sharp rupee depreciation to lift textile exports.

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A Sakthivel, president, Tirupur Exporters Association, said order flow in the past two months rose 10 per cent as compared with a decline of three to five per cent during the same period last year.

The industry exported garments worth Rs 12,500 crore (Rs 125 billion) last year. These shipments had fallen 10-15 per cent in 2009-10 and 2010-11; in 2011-12, growth was flat, thanks to the rupee fluctuation against the dollar. In 2006-07, when the industry clocked around Rs 11,000 crore (Rs 110 billion), it had set a target to reach $4 billion by 2012; however, it could reach only $2.75 billion.

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"We are doing well in the last three months as orders from Bangladesh are now coming to India. The US economy is showing some positive sign and the main markets of Germany and the UK in Europe have also picked up," said Sakthivel.

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“To some extent, the foray into new markets have also helped the industry," said Sakthivel. These markets include Japan, South Africa, Israel and South America.

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With these positive signs, the industry is expected to close the current financial year with export turnover of around Rs 15,000 crore (Rs 150 billion), as compared with Rs 12,500 crore (Rs 125 billion) in 2012-13. Tirupur exporters said the free trade agreement expected to be signed soon with the European Union would help them compete with Bangladesh, which is now enjoying duty-free benefits.

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The other major challenge, said Sakthivel, was cost of production. A leading exporter said power cuts were affecting all units. Currently, thanks to wind energy, the town which used to see seven to eight hours of daily power cuts is breathing.

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"Wind energy is temporary for three to four months, after which again we will face severe power shortage. Unless the government acts fast, it will be difficult to turn these inquiries to orders," he said.

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Besides, the recent increases in diesel prices is hitting the industry, said Sakthivel. To boost exports and to meet the competition, exporters have asked the government for a scheme to buy diesel at international prices from an oil marketing company. And, for concession on duty credit scrip use.

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The association also says there is a big shortage of workers in meeting the rising demand. The industry has lost workers after the earlier downturns, which had resulted in units having to close.