“We were forced to revise the prices a few months ago to offset the losses we were incurring because of the increasing production cost,” said GS Babuji, general secretary of Seconds Collar Shirts and Inner Wears Small Scale Manufacturers Association.
Textile manufacturers attributed the rise in expenditure to increase in prices of yarn, packing materials, labour wages and fuel prices. For example, truck rental fares for transporting raw materials and finished garments have risen by 25 per cent in two months, said manufacturers.
There are about 2,500 small scale knitwear units in Tirupur that employ over one lakh labourers. “Demonetisation, GST and other factors has already taken a toll on the garment manufacturing sector and more than 30 per cent of the units stopped production in four years. So increasing the price of garments by 10 per cent is the only way we can survive in the industry even though we are making wafer-thin profit,” said Babuji.
Apart from escalating production costs, import of cheaper apparels from China and Bangladesh also pose a threat to the industry. “The entire apparel industry here may have to shut down if the duty-free import of clothes from Bangladesh is not stopped. Garments from China are imported into India through Bangladesh without paying any tax. Even though the garments are inferior in quality, they manage to attract buyers because of their low price and attractive designs,” Babuji added.
The apparel industry from Tirupur have already lost 20 per of their garment supply to Delhi, Calcutta and Mumbai thanks to Chinese imports. Not just the domestic players, the export industry has also been hit by the rising cost of fuel and other raw materials.
While clothes worth Rs 26,000 crore were exported from Tirupur in the financial year 2016-17, the figures fell to Rs 24,000 crore in 2017-18.
“There was a dip in exports due to introduction of GST. But, we are hoping to do business worth Rs 30,000 crore this financial year and next six months will be crucial for us,” said Raja M Shanmugham, the president of Tirupur Exporters’ Association (TEA).
“The industry can perform better only if the government provides the kind of infrastructure support that China enjoys. We have been seeking help in duty drawbacks,” he added.