With the final budget of BJP-led NDA government set to be announced on February 1, Tiruppur, India’s leading exporter of knitwear, is hoping that two of its major issues – Establishment of ESI hospital and setting up a specialised central board for knitwear headquartered in Tiruppur.
Tiruppur, India’s leading exporter of knitwear contributes around 50 percent of the country’s knitwear exports. As at the end of financial year 2017-18, the industry has earned revenue to the tune of Rs 42,000 crore, including exports and domestic sales. Around 20,000 production units – including micro, small and medium scale enterprises – function in Tiruppur, employing nearly 7 lakh people directly.
However, an industrial cluster that was once growing at 20% saw negative growth in 2017 for the first time in a decade due to demonetization and the roll out of Goods and Services Tax.
“We are slowly getting up. Demonetisation and GST hit the industry bad that there has been no considerable growth in the business since the year 2016-17 and it would be nice if credit and loan mechanisms are relaxed for us,” says Raja M Shanmugam, the President of Tiruppur Exporters’ Association (TEA).
Every year, before the budget, the Central government invites industry leaders to consult on policy issues that concern the garment industry. However, since this year’s budget is an interim budget, before the elections, there was no meeting or consultation process that was carried out by the government. “Our general plea is that this industry is an ever-growing industry and we usually request government to make sharp decisions so that the industry is allowed to realise its full growth prospects. Our demands, hence, were also based on this outlook,” Raja says.
However, the prime demands of the industry as a whole, circles around two major issues: Establishment of ESI hospital and setting up a specialised central board for knitwear headquartered in Tiruppur.
The government sanctioned a 100-bed ESI hospital to Tiruppur, in addition to the one already present, in 2015 at an outlay of Rs 150 crore. The ESI Corporation also gave an in-principle approval for the hospital in 2017. Three years later, the project is yet to take off. “There are some issues with land acquisition as far as we know and that is why the project is stalled. We would like the Prime Minister to step in and accelerate the process so that it starts benefiting the people of Tiruppur soon,” Raja explains.
Set up a dedicated board for knitwear
Another major demand of the industry is the setting up of a dedicated board for knitwear with its central office in Tiruppur. Raja says that this would help in getting on-ground inputs about what is going on in the industry and would aid in the development of all the stakeholders. “Tiruppur is the biggest centre for garment export in the country and right now there is no dedicated authority to listen to our qualms and convey it to the decision-makers. How will those sitting in New Delhi know about the realities of a place like Tiruppur which is far removed from the power centre?” he asks.
Labour and MSME-friendly initiatives
Apart from these two major concerns, representatives of the Tiruppur garment sector have also been pressing for the establishment of a labour-supportive infrastructure such as housing colonies and a research and development park for a long time now. “Providing decent housing for the migrant labour working here will help them focus on the work and also to attract more people from all corners of the country,” Raja points out. Since two-thirds of the industry consists of small and medium scale units, which cannot afford to have their own research wing, it would make them competitive if there is a central pool of R&D talents from which they can pay and take designs from, he adds.
Addressing trade restrictions to promote competition
Another worry the industry has is the trade restrictions that are in place for India to export to the US and European markets. Raja says that in a market where competitive products are offered by countries such as Vietnam and Cambodia, a bigger country like India has more limitations to take its products global. “Since those countries are categorised as under-developed countries, their products are designated duty-free in European and American markets. India is tagged as a developing nation and so we don’t enjoy such privilege for our products and hence we are made to pay entry tax when our products are sent there,” he explains.
The move is slowly killing the industry since a lot of production units here are small scale business who are affected due to this restriction and Raja Shanmugam wants the government to try and address this issue. “We have been blessed with two important factors in comparison with the other countries. We have high manpower availability and raw material, which are the two most important inputs for this industry. Hence, we want the government to do something about it,” he adds. The representatives from TEA are planning to present their demands in person to PM Modi during his visit to the city in February.