The Hindu Business Line : With phasing out of quotas — Garment exporters gearing up for social audit norms

WILL 22-year-old Saroja, who works in a garment factory on the outskirts of Chennai, ever know that her well being is a cause for concern in the board rooms of large department stores like Wal-Mart or JC Penney.

Yet again, the fact that 19-year-old Senthil looks younger than his years, should matter to no one else other than himself. And, it would. But he works in an export garment unit, which has to prove it does not employ children.

With phasing out of quotas at the end of the year, vendor compliance and social audits of ready-made garment units are being tightened up, says a garment industry source. Some of them even see it as a non-tariff barrier that will be used effectively in the post-quota era, the source said.

The department stores in the US and in Europe have been pressured by consumer action groups like the Clean Clothes Campaign to ensure that there is no child labour in the factories and that the workers in textile and garment units are given all the benefits of a clean working environment and their rights. Sources said that these groups have a lot of influence on the consumers so the stores are forced to comply with the rule.

Mr K. Ravichandran, Senior Vice-President, Commercial, Celebrity Fashions (P) Ltd, said that the first step was to obey the (labour) laws of the land.

The social audit norms include things such as good ventilation, fire exits , two ft. between the aisles, toilets and so on which some of the large players have implemented, he said.

In anticipation of the post-quota regime and to achieve economies of scale, some of the large garment exporters have started consolidating their companies, not just in and around Chennai but in garment manufacturing clusters in other parts of the country also.

For instance, Celebrity Fashions, one of the larger export houses, has brought five of its companies together which has put its total capacity at 2,000 machines at its disposal.

However, garment industry sources said that not all the companies are consolidating; some others are maintaining different units mainly to avoid labour problems.

Ms Reshma Rao, a Chennai-based exporter, said that one of the advantages that Indian exporters have over their Chinese counterparts is the shorter lead times (the number of the days required to accept an order), except in the case of Salem woven dye fabric which requires a lead time of 75 days.

Chinese exporters are asking the buyers for orders six months in advance but once the order is taken they are able to execute it in about 30 to 45 days because of higher productivity of the worker.

The major problem facing garment exporters today is not the lack of orders but the pressure on prices.

Mr Ravichandran said that most buyers are now paying less for a shirt compared to what they were paying five years ago. However, the input costs - power, cost of fabric and labour - have been rising. Also, there has been reduction in Government subsidies for exporters.

The domestic market has also become attractive for the garment manufacturers. Many of the exporters, such asCelebrity and S&Y Mills, have come out with brands like Indian Terrain and Special Editions for the Indian market.

The Chennai brands, which have a presence in other cities, are Basics and Derby. Post-quota, Mr Ravichandran said that garments from competing countries would also find their way into the Indian market, which would make the domestic market aggressive.

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