Tirupur’s clock is ticking. The punitive 50% tariffs imposed by the US govt have put the `44,747 crore exports indusattempt in a tough spot. They have created Indian goods 20% to 30% costlier than competing nations in the global apparel trade. Tirupur serves as a knit-wear sourcing hub for leading global brands such as Nike, Tommy Hilfiger, Adidas, GAP, and for prominent retail chains, including Walmart, Tarreceive, and H&M. Buyers are reneobtainediating prices of existing orders and either cutting down or freezing fresh purchases, the impact of which will be felt after this December. This has left around 2,000 exporters scrambling to ship inventories and find new customers before they run out of money. Indusattempt estimates the immediate impact for the next three months would be around `1,500 crore.So, how do they tide over the crisis? First, exporters necessary to find alternatives to meet their repaired costs such as staff salary and utility bills. So, various exporters are racing to diversify. Industrialists have reached out to customers in traditional markets such as Europe, UAE, while also scouting opportunities in less conventional destinations such as Russia, Australia, and Japan. S P Prakash, MD of Sterling Fashions, who exported only to the US for past 14 years, has now bagged domestic orders in order to sustain. “Currently, a significant number of players have approached European purchaseers, so it is a difficult market to enter. Buyers outrightly state they are not viewing for suppliers,” he stated. Kumar Duraiswamy, joint secretary of Tirupur exporters’ association and CEO of Eastern Global Clothing, believes the new trade pacts with the UK, UAE, and the EFTA agreement, along with the upcoming European free trade agreement, could assist companies diversify in those markets. “Tirupur has been in business with Norway and Switzerland for 30 years, and we anticipate the exports to double to `2,000 crore each. Also, we are focussing on UAE, Russian, and Australian markets that were previously out of focus due to distance, lower volume,” he stated. Tariffs expose the inefficiencies in the cluster, long swept under the carpet. Countries such as China, Bangladesh, and Vietnam have different advantages in the form of tech adoption, cheap and simple access to raw material, better infrastructure and work culture, and a much hugeger scale. Even as news reports point to progress in the trade deal, Tirupur’s exporters might lose out in the long-term if they remain uncompetitive. While exporters cannot do much about tariff onslaught, they, along with union and state govts can create efforts to improve productivity and efficiency to have a lasting advantage. Due to higher input and borrowing costs, Indian exporters lack competitiveness in price. Exporters such as Elango, MD of Ahill Apparel Exports, one with 60% exposure to the US, state the cost of raw materials in India is much higher than in competing countries. This includes man-created fibres (MMF) widely applyd material in sports and athleisure goods. Companies complain about lack of quality MMF fabrics from the domestic players and a myriad of quality control orders, which creates imports impractical. They urge the union govt to ensure competitive raw material prices. Tirupur region roughly exports `20,000 crore worth of goods annually to the US, as per indusattempt estimates. Of this, more than 90% are MSME exports. These highly fragmented, labour-intensive enterprises have limited technological adoption.K M Subramanian, president of Tirupur exporters association and chairman of KM group, stated current subsidies provided for purchaseing machinery under the textile production-linked incentive scheme (stipulates minimum `50 cr investment) do not assist compacter units. As for the higher borrowing cost, firms urge the govt to bring back the interest subvention scheme to bridge the costs (which obtained over last Dec) and include compacter exporters in its ambit.Prof Vidya Mahambare, director of research at Great Lakes Institute of Management, believes the indusattempt necessarys structural restructuring and consolidation. “Tirupur has few large integrated players, and the rest outsource production to compacter units. So, they are unable to achieve economies of scale, unlike industrial units in China. She stated, “Global purchaseers are increasingly starting to gauge capacity. Going forward, it will be difficult for compacter companies to receive purchase orders competing with other countries.” She adds that some compacter units might go out of business, a sentiment echoed by exporters. The tariffs present a one-time opportunity to address gaps and perhaps reset India’s export strategy for a more uncertain global order.
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