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Testing times for Tirupur

Tirupur is facing testing times with thinning margins, declining overseas demand and relatively high labor costs. For the past three years, export growth has not been up to the expected level. The incentives the industry received before GST worked out to nearly 13.2 per cent, which was reduced to 5.7 per cent after GST. Garment exporters in Tirupur work on thin margins and can absorb the costs if incentives are reduced by three per cent or four per cent. But a drastic cut affects liquidity.

The EU and the US constitute 70 per cent of Tirupur’s knitwear exports market. But it is imperative that exporters look to new and emerging markets. The four markets showing high potential for future growth are the UK, Chile, Israel and Japan. Products with high growth potential must be identified and individual strengths such as technology innovation can be leveraged.

Out of the 1,500-odd direct exporters, the number of exporting units with more than a Rs 100 crore turnover is more than what it was a few years ago. There are at least 20 units with more than a Rs 500 crore turnover. The number of letter-head exporters has reduced drastically after GST. However, the recent announcement on reimbursing embedded taxes has revived sentiment.

 
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