Even as the industry continues to wait for business, the buying offices in Tirupur are upbeat about the changing scenarios that the textile industry is witnessing this year. Popularly known as “Knit-City”, the country’s knitwear hub, Tirupur still remains the preference for many buyers… some even admitted that business shifted from Bangladesh is coming their way.
Buyers working in the Rs. 12,000 crore per year Tirupur industry, which has been severely hit by multiple internal issues, from environmental concerns to power and labour shortage, besides the difficult economic conditions faced by the US and Europe, have borne the brunt of the situation with many buying offices in Tirupur having shut down in the last two years. “I feel that most of them have failed in adapting to the sudden changes and have been unsuccessful in adopting new strategies to survive. Even we faced difficult times, but we tried to balance the trade by expanding our product range and have also started looking for products from hubs other than Tirupur. Innovative products coupled with sharp prices and a transparent method of working, alone can build mutual trust with the customer who can differentiate a company from the rest,” believes Vishnu Manikandan, Senior Executive, Apparel Global Consulting.
Industry estimates put the buying office closure figures at around 15-20%, the remaining are reworking strategies to survive. While some offices have incorporated the strategy of sourcing products from places outside Tirupur, others believe it’s not possible for everyone. “Shifting outside Tirupur is feasible only for bigger buying offices, whereas it’s befitting for small and medium sized offices to stay in Tirupur so that the labour, transportation and raw materials sourcing is viable for them,” says Anandanan, Managing Partner, Knit Sourcing Inc.
Interestingly, while some offices believe that flexibility and adapting to new strategies is the key to survival, others consider Government support to the industry is crucial for its advancement. “The Government’s help is much needed in the fields of banking, R&D, training unemployed workforce and in creating new and concrete policies. Though textile sector is the second largest employment provider in India, the industry faces tremendous labour shortage in different areas of garment production, particularly after Diwali festival. Due to this reason, most factories pay 50% higher charges than normal, resulting in the increase of garment prices leading to difficulty in getting orders,” opines M. Anand, MD, Dean Textiles Buying Service.
Some buying offices believe that with changing times, business should be modified according to the need of the hour to not only survive but also grow. “Though situations have been really tough in the past, but opportunities still exist. There is a shift in business; earlier exports were good and domestic market wasn’t, now domestic is good and exports are not. In addition, people are venturing into non-traditional markets such as South America, South Africa, etc. Many buying offices want to continue operations in Tirupur, as the market is flexible,” says D. Sivakumar, MD, Lutz and Company, In addition, Anand says, “There is no place in India which can replace Tirupur for its knits and with improvement in the global market we are receiving more enquiries and opportunities in the same category. During the past two years, we have also started concentrating on woven and we plan to do reasonable business in the coming years.” However, Vishnu informs, ““Due to tight competition on prices we have lost our space with traditional basic tees, but, we have also slowly moved to niche products where there is still a better market to be explored.”
Though the buying offices do business directly with retailers and stores, but generally, many of them work with importers. “Negotiable prices, easy working relation, a wide variety of products and a wide customer base leading to an increase in opportunities for expansion are the major advantages of working with them,” claims Vishnu. But working with them, comes with few drawbacks such as, “tight pricing leading to a cut down in margins, fear of rejections due to delays in delivery dates as the retailer is uncertain whether the product will be accepted by the market and a demand for more sampling of the products,” states Anand.
Bangladesh Orders Shifting to India…
With the recent collapse of Rana Plaza, in Bangladesh on 24 April 2013, preceded by many other calamities and sharpen by political unrest the western retailers are on the lookout for new opportunities in business. The news has resulted in retailers taking extra efforts to know whether the unit from where they are sourcing products is meeting factory compliances. Sivakumar informs, “This is not only due to the collapse of the building ensuing increasing pressures from the international committees but also the growing Islamic tensions due to which there are delays in delivery. As a result, we are receiving lot many enquiries.” But on the other hand, Anandanan believes, “Practically, it is not possible for all buyers to shift orders from Bangladesh, most likely, compliance based clients can start shifting but it is also a time consuming process. Indian market is fit for clients looking for quality-oriented premium products, although we work minimum quantities with variations in style, still the clients’ want competitive prices. Working cost on smaller quantities leads to increase in prices, so the buyer should keep this in mind before venturing into India.”
Looking forward to the Free Trade Agreement (FTA) with Europe, which many believe is just around the corner, the hopeful buying offices are looking for some major transformations in business. The industry is witnessing growth in 2013, many attributing the change to providing better product mix, good quality, sourcing few products from outside Tirupur and expansion into unexplored non-traditional markets. “Though we are getting a good amount of enquiries for business, but the unpredictable yarn prices, labour shortage, high dyeing cost is making it difficult for us to have a stable growth. While Indian products get a good response in the world market, and the industry is providing livelihoods to millions, Government’s support is essential for it to compete against tough competitions from countries such as China, Pakistan, Bangladesh, etc.,” concludes Anandanan, stressing on Government’s support in providing a better future and consistent development to the industry, which is the second largest employer of skilled and unskilled labour in the country.
