The Rs 13,000-crore knitwear industry at Tirupur in Tamil Nadu is faced with a peculiar problem. The export-based industry has been witnessing an uptick in enquiries and orders, but it is unable to accept all orders. Reason: unprecedented load-shedding of eight to 10 hours a day.
With the industry reeling under the frequent power cuts, most of which is unscheduled, almost all units have been forced to run on gen-sets. This is a costly proposition for the units because gen-sets cost Rs 18-19 for a unit of power, compared with the Grid’s Rs 6.5, industry sources said. Some units that could not afford to hire or buy gen-sets have downed shutters, they added.
This tiny city, which accounts for 60-70% of India’s knitwear industry, is situated on the banks of the river Noyyal. For decades, Tirupur has been the hub for the knitwear industry providing employment to over 500,000 workers. Still, at any point of time, there is a shortage of about 20,000 workers.
During the first half of the financial year (April-September), the industry reported a 30% growth in exports at Rs 8,646.52 crore compared to Rs 6,665.93 crore a year ago. The average growth in terms of foreign currencies was 20%.
The industry had been flourishing till 2010, when the Madras High Court ordered closure of dyeing units allegedly polluting the Noyyal river. After this blow, came the cotton shortage, followed by a sudden drop in orders from major economies.
The dark clouds over the industry started clearing after the High Court order was later revoked. However, the prospects of the industry are dim in the wake of the large-scale load-shedding in Tamil Nadu, for which the state’s Chief Minister J Jayalalithaa recently blamed the Central agencies.
"The sudden and unanticipated drop of about 2,500 MW can be directly attributed to Central Government Agencies including Central Generating Stations and Central Public Sector Undertakings like NTPC, BHEL, Indian Oil Corporation and Coal India Ltd," she had said.
A Sakthivel, president of Tirupur Exporters Association, said that with China and other neighbouring countries becoming costlier owing to high costs of labour, infrastructure and other compliance issues, customers are now keen on sourcing from India.
Major brands such as Disney have already diverted their orders from other countries to India. India is five% cheaper than China now. This, along with India’s strengths in quality, design, deliver and communication, also helps India in attracting more orders, Sakthivel added.
“We can easily close the current financial year with an export turnover of around Rs 17,000 crore,” said Sakthivel, adding the real challenges are cost of fund, workers and high cost of power.
According to Raja Shanmugam, managing director of Warsaw International, a supplier of polo shirts and casual wears to stores in the EU and US, the industry’s prospects will be bright if the day-to-day issues such as power cuts and labour scarcity are resolved.
While the production loss because of load-shedding is tangible, Shanmugam said the industry suffers intangible loss, too, on account of the damage to the machinery because of frequent outages.
According to him, Tirupurians have invested in windmills, which can produce around 1,200 mega watt (MW) of power, while the industry’s requirement is only 185 MW. “But unfortunately, we are not able to use it due to poor grid connection,” said Shanmugam.
K M Subramanian, managing director of K M Knitwear, one of the largest exporters in Tirupur, said that two years ago, a basic T-shirt used to cost Rs 12; today, it costs Rs 18 because of labour and power costs.
He noted that the industry is not able to convert enquiries into order due to the power cut. “Already, our deliveries are getting delayed by two-to-three weeks.”