In a strategic move to de-clutter the financial bottlenecks stalling India’s knitwear capital, senior officials from the Reserve Bank of India (RBI) recently convened an interactive session with the Tiruppur Exporters Association (TEA). Dr Harendra Behera, Director, RBI, highlighted a concerning trend: private investment growth in the apparel sector has remained largely stagnant since 2008, with capital increasingly shifting toward financial assets rather than physical manufacturing capacity. This intervention comes at a critical juncture as Tiruppur, which accounts for 68 per cent of India’s knitted garment exports, targets a massive Rs 1 lakh crore export milestone by 2030. Despite a healthy trade surplus, the sector currently navigates a complex ‘triple squeeze’ of high freight costs, raw material volatility, and stringent Basel III norms that tighten credit access for the cluster’s 95 per cent MSME-base.
Liquidity constraints and credit innovation
The dialogue underscored a growing rift between the sector's ambitious growth plans and the ground-level availability of affordable credit. Industry representatives argued, the current 2.75 per cent interest subvention under the New Export Interest Subvention Scheme 2026 - capped at Rs 50 lakh per firm - falls short of the requirements needed for large-scale technology upgrades. To bridge this gap, the TEA has formally proposed the creation of a ‘Dedicated MSME Export Funding’ framework, modeled after priority sector lending in agriculture. Furthermore, to streamline the friction of working capital cycles, there is a push for a digitized loan renewal system integrated with the Jan Samarth portal, aimed at providing real-time execution visibility for banks and transparency for exporters.
Sustainability costs and global compliance
A pivotal focus of the discussion was the financial burden of ‘Green Compliance.’ While Tiruppur leads India in sustainability - recycling 13 crore liters of water daily via Zero Liquid Discharge (ZLD) systems - the escalating maintenance costs of Common Effluent Treatment Plants (CETPs) are eroding price competitiveness against regional rivals like Bangladesh and Vietnam. With the 2027 EU Digital Product Passport deadline looming, the RBI and TEA are exploring ‘Green MSME Finance’ initiatives. These would provide low-cost capital specifically for ESG-compliant machinery and traceability tech, ensuring that Tiruppur’s ‘Made in India’ tag remains synonymous with both quality and ethical standards in the 2026 global retail landscape. India's premier textile hub, Tiruppur generates over Rs 45,000 crore in annual export revenue and employing nearly 10 lakh people. Specializing in cotton-based knitwear, the cluster serves global retail giants across the US and EU. Following recent FTA breakthroughs, the region is expanding into man-made fiber (MMF) apparel to diversify its product basket and achieve 15 per cent Y-o-Y growth.
