Tirupur exporters scurrying for dyeing facilities

As the dyeing units in Tirupur are closed due to pollution control problems, the garment manufacturers and garment sourcing companies are waging a grim battle to have the dyeing jobs done elsewhere.

The problems facing the nearly Rs 15,000 crore garment and hosiery units in Tirupur that employ more than five lakh workers are not restricted to the town alone. If the city ultimately loses out business, the gainers need not be other cities. India itself may lose its competitive edge in the business as several other competing nations would gain from the present impasse and with the global economic uncertainty it is possible that the loss of business to Tirupur may inflict permanent damage to the country as a garment sourcing centre.

Mr V. Ramachandran, CEO, Sheen Nettwork, a Bangalore-based garment exporting company, which sources a significant quantity of its exports from Tirupur, told Business Line the closure of dyeing units in Tirupur in the wake of the High Court order due to pollution control issues had only compounded the problem as the exporters were in a ?very bad shape' as the price of yarn had gone up by more than 130 per cent and the fear of increase on a weekly basis makes their ?life miserable'.

He said the exporting community had to run ?from pillar to post' to get the dyeing work done and their representatives were in Kolkata, Mumbai, Ludhiana, Delhi, Hassan and Belgaum, in Karnataka, and Nagari, in Andhra Pradesh, for the getting the dyeing work done as the capacity was very limited in SIPCOT complex in Perunthurai near Erode. No dyeing mill is keen to take small quantities (less than 1,000 kg) for dyeing and dyeing units tend to jack up the rates to profit from the situation.

The small timers in dyeing in the Erode belt, who are keen to keep their plants revived with traditional dyeing methods (in winches) are demanding 100 per cent payment in advance and the quality is not guaranteed. The dyeing mills are not ready to give assured delivery time and exporters are unable to confirm the final delivery dates to the overseas buyers. In most of the cases, buyers cut back the order quantity or asked the exporters to airlift the goods at their cost which only adds to the losses of exporters. The buyers are even threatening cancellations.

Stiff competition

Mr Ramachandran said garment industry was like a ?perishable industry' competing with Bangladesh, Turkey, Sri Lanka, China, Egypt and other smaller countries such as Lithuania. The big exporters were pulling up their contacts in other parts of the country to organise their dyeing and the worst affected lots are small and medium sized companies. Most of the units were losing business and were on the verge of closure due to high cost of borrowing from private financiers since banks have tightened the lending norms following global recession for the past two years.

Explaining the grim scenario faced by the industry in Tirupur, he said the garment industry in Tirupur ?cannot go on like this'. He said ?as a buying house we refused business worth $3 million in the last fortnight'. ?A solution has to be found in two weeks or else other players will grab the business and may be we would lose certain customers on a permanent basis.? India is already not in a ?favoured nation' list of buyers due to duty advantage they get from other countries such as Bangladesh.

He said the buying houses were looking for manufacturing facilities outside Tirupur, be it Coimbatore or Noida or Kolkata or Pune, which is ?not a good scenario for Tirupur' as the whole city is dependent on this business and no scope for other business opportunities existed. He warned that unless a solution to bring more business and for smooth execution of orders in Tirupur was found quickly, the city may ?not find a place' in the garment production map in a few years from now.

Fool proof system

He advocated drawing up of an action plan to have a fool proof system for ?zero discharge' of treated effluent on a permanent basis. The industry and trade associations must work out an effective wages formula with assured productivity. The financial costs should be reasonable with subsidised interest rates on bank loans and yarn prices, knitting, printing, dyeing and compacting costs should be made competitive so that Tirupur units can be cost effective not only with other competing countries but with other cities in India as well.

Mr Ramachandran said at present, the dyeing charges for black is around Rs 68 a kg, whereas ?we are forced to pay' anywhere in the region of Rs 130 a kg. It is cheaper for a unit in Tirupur to organise dyeing in other cities if they plan well. If the other centres can offer timely delivery and meet the quality standards, obviously the dyeing mills in Tirupur will face the heat.

He said the exporters from Bangalore or Chennai who were getting their fabrics ready in Tirupur, were planning to get their fabrics dyed elsewhere on a permanent basis. These garment exporters incur costs to have the dyeing work done at Tirupur. It made no difference if they have to procure them from Hassan or Belgaum or Nagari or Kolkata or Mumbai.

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