Tirupur exporters are bullish on CEPA agreement with the UAE

T.E. Raja Simhan | | Updated on: Feb 19, 2022

istock/Waldemarus | Photo Credit: Waldemarus

Exporters from Tirupur say that the deal can help them compete with China and Bangladesh

Knitwear exporters from Tirupur in Tamil Nadu are bullish as exports from the ‘Dollar Town’ could possibly bounce back strongly with India signing the Comprehensive Economic Partnership Agreement (CEPA) with the UAE on Friday. Tirupur exports nearly half of the India’s knitwear to the UAE.

The highest recorded knitwear exports to the UAE from India was in 2016-17 with a value of ₹14,293 crore with Tamil Nadu contributing nearly half of the total exports. However, thereafter the exports to UAE started declining year-on-year to nearly half due to demonetisation and the introduction of GST, said exporters in Tirupur.

Exports of knitwear, including T-shirts, sarees and innerwear, from India to the UAE in 2020-21 was ₹6,756 crore. In the first nine months of the current financial year, the knitwear exports clocked ₹5,280 crore, said S Sakthivel, Executive Secretary, Tirupur Exporters’ Association (TEA).

‘Morale booster’

“The long-pending bilateral CEPA agreement is a booster and a great opportunity for us to increae exports as more business is coming to India post the Covid pandemic. The opportunity needs to be properly tapped for which industries are getting ready by themselves. This kind of policy supportive intervention will boost the morale of the efforts taken by the industry,” said TEA President Raja M Shanmugham. “We hope the CEPA will help us to regain the loss of exports to UAE and be beneficial to exporting units in Tirupur,” he added.

TEA has originally set a target for Tirupur knitwear business reaching ₹1 lakh crore in 2020 itself but got postponed to 2024 due to the Covid pandemic. The signing of CEPA revives the ‘feel good factor’ among the exporters and with this positive direction, they are confident of achieving the target in 2024. “We are hopeful of double the value of exports from Tirupur to around ₹7,000 crore in next five years,” he added.

Competing with China, Bangladesh

DM Kumar, CEO, Eastern Global Clothing, Tirupur, said that post CEPA, Indian textile products will not be subjected to 5 per cent import duty by the UAE. This is a huge saving for them. “We should take advantage of this and start exporting more and use Dubai as a hub to keep the inventory to enable buyers from other countries like Eastern Europe and Africa to pick up the stock just-in-time,” he told BusinessLine.

Clients from Eastern Europe countries like Ukraine, Latvia, Romania, Poland and Bulgaria, and from many African countries regularly visit Dubai to procure their requirements. China has been using Dubai as a hub and has been supplying them. “However, we can now compete strongly with China and capture the Eastern European and African markets,” he added.

R Sakthivel, MD of Daffodil Knitwear Pvt Ltd, Tirupur, which has its presence at Sharjah, says that the CEPA will help in competing with countries like Pakistan and Bangladesh that supply in large quantities to the UAE and Gulf region. “The agreement is a major initiative to tap the European market, and also Australia,” he added.

Published on February 19, 2022
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