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Despite improvements in new orders from key markets, the current quarter is unlikely to bring any big cheer for knitwear exporters in Tiruppur, says an industry body that represents the knitwear capital of India.
Exporters say there was a contraction in demand in key markets such as the US and European Union during the December 2022 quarter despite buying seasons such as Thanksgiving day, Christmas, and New year.
In Q3, the overall decline was about 19 per cent at about $975 million for knitwear exports from Tiruppur.
“The order placement is gradually increasing and January 2023 has also seen some increases. But those are not promising and we feel that the declining trend would continue in Q4 also,” S Sakthivel, Executive Secretary, Tiruppur Exporters Association told businessline.
In dollar terms, knitwear exports from Tiruppur declined by 10.1 per cent to $393 million when compared with $437 million in December 2021. Overall, knitwear exports from India fell 2.9 per cent to $737 million during the last month as against $759 million in December 2021.
Inflation and war impact
The declining trend for Tiruppur exporters started in August 2022 as an impact of the Russian-Ukraine war. Tiruppur accounts for about 55 per cent of knitwear exports from India.
“High inflationary conditions and recessionary trends in key markets of the US and EU kept the textile and apparel demand subdued in 2022, especially the later half. Volume growth in most of the markets remained in negative to nil zone, with market size increase happening due to higher product costs,” according to Varun Vaid, Business Director, Wazir Advisors, a management consulting firm.
China has continued to lose its share in the global textile and apparel exports due to the rising cost of manufacturing and geo-political shifts. Bangladesh and Vietnam emerged as the highest gainers of China’s lost share, successfully catering to global fashion buyers looking for supply base diversification.
In its outlook for March 2023 quarter, leading textile company Arvind has said that the US/EU markets are seeing a lower-than-expected slow-down, though wholesale buying is yet to pick up.
The macro environment in the US/EU markets has started to show some improvement in the outlook, though the overall prognosis still remains cautious given still higher than target inflation in the US, continuing war in Europe, and the reopening of China.
The company’s denim and garments exports dropped in Q3 FY23 as customers continued to postpone purchases.
As dwindling orders have caused some financial stress for exporters in Tiruppur, the industry has requested the Central government to increase interest subvention provided under the Interest Equalization Scheme (IES).
“What we are expecting is that there would be some positive announcements in the ensuing Budget and a support is given by increasing the interest benefit under IES from 3 per cent to 5 per cent to protect the garment exporting sector, particularly MSMEs,” said Sakthivel.
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