Knitwear garment exporters in Tirupur have always maintained they operate on wafer-thin margins. Under-cutting of rates to bag export orders is rather rampant. Industry insiders agree the tactic “is not healthy, but a route they are compelled to take to strike a deal.”

“This cut-throat competition in rate fixation has, over time, started to work against the interests of individual units,” observed Raja M Shanmugham, President, Tirupur Exporters’ Association (TEA). “A good number of units did not understand costing. They were content to clinch an export order, and buyers were taking advantage of the situation.”

For the first time, TEA has decided to take a call on this issue, and requested its members to ask their buyers to consider a 10 per cent increase in garment prices while finalising orders.

“It is not binding on our members to effect an increase, but we want to ensure that after confirming the order, the units do not incur losses,” Shanmugham told BusinessLine , adding: “Yarn prices have gone up 20-25 per cent and so have dyeing rates. At this juncture, units cannot afford to ignore input costs. They can instead show this message to the buyer when negotiating a deal rather than relent/budge.”

Asked if the timing was right for an upward price revision, considering that the government has effected a 10 per cent increase in basic custom duty on specified textile products from July 16, Shanmugham maintained that it was a separate issue. The industry had been requesting the government to curb the back-door entry of Chinese textile goods, he added.

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