The lockdown of cities in China following the coronavirus outbreak has given enough reasons for worry to the garment exporters in Tirupur district as manufacturing units in the garment hub of India has been largely dependent on accessories and embellishments from the foreign country.
Coimbatore: Tirupur, which contributes towards manufacturing more than 50 per cent of knitwear garments in the country, provides employment opportunities to nearly ten lakh people directly and indirectly. “If the situation doesn’t improve any time soon in China, it may badly hurt the garment exports from Tirupur district. We rely heavily on China for garment accessories like buttons, zips and even blended fabrics. When this supply chain gets disrupted, the manufacturers have to look for alternatives,” said S Sakthivel, executive secretary of Tirupur Exporters’ Association (TEA).
As it is quite usual for the manufacturing sector in China to slow down during the Lunar Year holidays, the manufacturing units in Tirupur have fortunately stocked up enough accessories in advance.
“Currently, we have stocks that may be adequate to meet our requirements even if there is short supply for a month or so. Yet, production may get disrupted if the situation worsens further in China. The real impact on our garment sector can be known in the coming days,” Sakthivel said.
Further, the exporters say that the cost of garments would increase exponentially if there is a further block in supply of accessories from China.
“Accessories from China are cost effective and give us a competitive edge in our garment pricing in the international market. Sourcing them either from other countries or from the local market may cost 50 per cent more. It may in turn increase the cost of our finished products,” Sakthivel said.
Such escalation in the price of garments, the exporters claim, may take a toll on orders from international buyers as manufacturing units in Tirupur are already facing ‘pricing pressure’ from competitive countries like Bangladesh and Vietnam.
Echoing a similar view, Kumar Duraisamy, another garment exporter, said that accessory and embellishment suppliers from China were already buying time from garment manufacturers in Tirupur following the outbreak of coronavirus.
“Almost 30 to 40 per cent of exports from Tirupur depend on the import of embellishments and accessories from China. The Chinese suppliers had given us assurance that their government is seriously working to bring the situation under control and resume the supply chain as soon as possible. It is difficult to find alternative markets as China has been the sole market leader in its own capacity,” Sakthivel added.
The coronavirus outbreak has come at a time when the garment sector in Tirupur is already reeling under a severe slowdown due to GST, demonetisation and economic slowdown.
The manufacturing sector in Tirupur had set a vision to do business volume for Rs 1 lakh crore in 2020. Going by the present scenario, it may be a far cry to reach this magical figure even in the next many years. With the Centre reducing drawback, exports may only come down drastically, say exporters.
According to sources, India has already been relegated to sixth rank in the global readymade garment manufacturing exports with a global market share of 3.9 per cent while Bangladesh and Vietnam are enjoying second and third position with a market share of 7.9 per cent and 5.2 per cent respectively.
On the prospective side, some exporters sound positive and say that they are willing to explore new international markets, where China had its dominance so far. “Our biggest advantage is that at least for the next three months, the traders from European countries and other international traders will not visit China for any garment business. Similarly, the Chinese may be restricted entry in these countries until the situation recovers. Subsequently, the orders from international traders that usually go to China will land in the kitty of that of India and Bangladesh,” said RP Govindasamy, president of Tirupur Elastic Manufacturers and Traders Association (TEMATA). We are hoping for such orders to come in a few months’ time, he added.
As it is quite usual for the manufacturing sector in China to slow down during the Lunar Year holidays, the manufacturing units in Tirupur have fortunately stocked up enough accessories in advance.
“Currently, we have stocks that may be adequate to meet our requirements even if there is short supply for a month or so. Yet, production may get disrupted if the situation worsens further in China. The real impact on our garment sector can be known in the coming days,” Sakthivel said.
Further, the exporters say that the cost of garments would increase exponentially if there is a further block in supply of accessories from China.
“Accessories from China are cost effective and give us a competitive edge in our garment pricing in the international market. Sourcing them either from other countries or from the local market may cost 50 per cent more. It may in turn increase the cost of our finished products,” Sakthivel said.
Such escalation in the price of garments, the exporters claim, may take a toll on orders from international buyers as manufacturing units in Tirupur are already facing ‘pricing pressure’ from competitive countries like Bangladesh and Vietnam.
Echoing a similar view, Kumar Duraisamy, another garment exporter, said that accessory and embellishment suppliers from China were already buying time from garment manufacturers in Tirupur following the outbreak of coronavirus.
“Almost 30 to 40 per cent of exports from Tirupur depend on the import of embellishments and accessories from China. The Chinese suppliers had given us assurance that their government is seriously working to bring the situation under control and resume the supply chain as soon as possible. It is difficult to find alternative markets as China has been the sole market leader in its own capacity,” Sakthivel added.
The coronavirus outbreak has come at a time when the garment sector in Tirupur is already reeling under a severe slowdown due to GST, demonetisation and economic slowdown.
The manufacturing sector in Tirupur had set a vision to do business volume for Rs 1 lakh crore in 2020. Going by the present scenario, it may be a far cry to reach this magical figure even in the next many years. With the Centre reducing drawback, exports may only come down drastically, say exporters.
According to sources, India has already been relegated to sixth rank in the global readymade garment manufacturing exports with a global market share of 3.9 per cent while Bangladesh and Vietnam are enjoying second and third position with a market share of 7.9 per cent and 5.2 per cent respectively.
On the prospective side, some exporters sound positive and say that they are willing to explore new international markets, where China had its dominance so far. “Our biggest advantage is that at least for the next three months, the traders from European countries and other international traders will not visit China for any garment business. Similarly, the Chinese may be restricted entry in these countries until the situation recovers. Subsequently, the orders from international traders that usually go to China will land in the kitty of that of India and Bangladesh,” said RP Govindasamy, president of Tirupur Elastic Manufacturers and Traders Association (TEMATA). We are hoping for such orders to come in a few months’ time, he added.