By Radha Venkatesan, IANS
Tirupur (Tamil Nadu) : With foreign exchange flowing in billions of dollars into Tirupur over the past three decades, this small knitwear export town in Tamil Nadu was dubbed the “dollar town” of southern India. But the dollar town is now desperately chasing the euro.
About 1,000 beleaguered garment exporters are making a beeline for European countries to bag the big euro contracts due to the sudden decline in the value of the US dollar against the rupee.
The sudden decline in dollar and the surging rupee had sparked an unprecedented crisis in Tirupur, which was exporting over 60 percent of its garments to the US and Canada.
The country’s knitwear hub lost some of its major garment contracts to Bangladesh and China, and its export turnover dismally plunged by 15 percent this quarter from an 18 percent rise last financial year (2006-07).
The Tirupur Exporters Association (TEA) claims that 10,000 workers have lost their jobs.
Yet, there’s a positive spin to Tirupur’s tale of woes.
The Tirupur exporters, who brought in Rs.110 billion ($2.8 billion) foreign exchange last fiscal, are now reinventing their marketing, production and financial strategies.
More importantly, they have shifted their export destinations to newer markets, particularly in Europe, to tide over the looming crisis.
“It is a real survival crisis… But we have the will to fight on. And we are exploring new markets in Europe, focusing on our quality and designing expertise,” S. Thirukumaran, managing director of EssTee Exports Ltd, told IANS.
He has cut down his exports to the US market from 30 to 10 percent now and dispatches most of his products to the European market.
“We convinced our European buyers who were earlier paying in dollars to switch over to pounds and euros.”
These exporters have raised their marketing pitch in the European Union, Australia and New Zealand with their avowed capacity for superior quality and huge-volume production, and value-added products such as design embellishments and a variety of fabric washes.
Bankers in Tirupur, too, confirm the fresh inflows of euro and pound. And as a proof of persisting export vibrancy, “wanted tailors, sewing assistants, merchandisers” boards hang on the electric posts of this small town.
Exporters who were fully dependent on the dollar market, too, have managed to get a toehold in the European market.
“All exporters are now knocking on the doors of Europe. Some of them have managed to get new clients. But it is difficult to get new buyers overnight and it takes a while,” says Chandrakumar of Sentinel Exports Ltd, a T-shirt manufacturing company with a turnover of Rs.340 million ($8.64 million) last year.
A frequent traveller to the US till a few months ago, he now heads only for Europe, particularly Britain.
However, Bangladeshi exporters enjoy a pricing edge here too, as their goods get a duty exemption in European countries because of the country’s “poor economic status”.
Hence some of the big exporters, who have big euro contracts on hand, have also launched major cost-cutting exercises by trimming middle-management staff such as assistant merchandisers, and suspending night shifts.
Besides, all export companies are now “hedging” currencies to insure against a further drop in dollar value.
“Though we have managed to get new clients in Europe, the future looks very uncertain. Unless the Indian government steps in with major concessions, the textile business will be in big trouble,” warns K. Rajkumar, managing director of Best Corp, which specialises in underwear and baby wear with an annual turnover of Rs.3.2 billion ($81 million).
The Indian government has raised the export drawback incentive by one percent in addition to the 3 percent granted a couple of months ago, taking the total concession to 11 percent.
But the Tirupur Exporters Association president A. Sakthivel says: “We expected at least 15 percent. It (11 percent) is not enough to tide over the crisis.”
Meanwhile, for now, it’s the euro mantra in Tirupur.
(Radha Venkatesan can be contacted at [email protected])