Wednesday, October 1, 2014

Emergence of Bangladesh is a major concern to Tirupur garment exports: Sakthivel

Source: http://www.portwings.in/articlesinterviews/emergence-of-bangladesh-is-a-major-concern-to-tirupur-garment-exports-sakthivel/

Port Wings News Network:


The emergence of Bangladesh is a major concern to Tirupur garment exports, Mr A Sakthivel, President, Tirupur Exporters Association (TEA) has said. In an exclusive interview to Port Wings, TEA president shared his views on the growth of Dollar City over the years, emergence of Bangladesh and China in garment exports, and the need for more infrastructure facilities to keep Tirupur as world’s top garment export destination.
Excerpts of the interview…

Q: Tell us about your growth and the industry you are representing?
Mr A Sakthivel: Tirupur, a knitwear hub and a natural cluster, is exporting knitwear garments globally and Tirupur export turnover was US $3 million in 1984 and now recorded US $3 billion in 2014 in 30 years.

Q: As the president of the influential Tirupur Exporters Association, how do you think about the extra responsibility?

AS: I see the position of President of Tirupur Exporters’ Association as an opportunity to serve the industry I belonged and the society I live. I could say that TEA is my breath and TEA is in my blood. As always, I will put all my hard work to elevate this Industry to more greater levels in the years to come. If anyone ask the turnover of my company, I proudly say Rs.18,000 Crores and I cannot separate myself from this industry.

Q. Over the years, Tirupur developed as a cosmopolitan area in the state with the arrival of labours from different parts of the country. How is the present condition of labour crisis here?

AS: The labour shortage issues have not been fully solved despite arrival of unskilled 
labours mostly from northern part of the country. In fact, due to the shortage of labour, exporting units are hesitant to take more orders since the meeting of delivery schedule will become a problem.

Q. In the country, in particular in Tamil Nadu, Tirupur is an economic hub. How is the support from both Centre and State for the growth of the region?

AS: As far as the support from Centre is concerned, we used to get positive measures through the schemes announced in Foreign Trade Policy. Under Market Linked Focus Product Scheme, we used to get 2% of FOB value of exports as duty credit scrip for the exports made to EU, US (MLFPS), 3% duty credit scrip for the exports made to specified African, Latin American countries, 2% duty credit scrip on the incremental growth during the year, 3% interest subvention on packing credit and we have now requested to increase the percentage and also continuance of interest subvention with retrospective effect from 1st April 2014.
We get Value Added Tax (VAT) refund for the taxes paid to the inputs as input tax credit from the State government. We have already requested the State government for contribute for construction of working women hostels in five places in Tirupur.  State government has promised to support for the same.

Q. Tell us about the volume of business generated in the region and what are the targets in coming years?

AS: The exports from Tirupur was  in the range of Rs. 12,000 crores to Rs. 13, 000 Crores in the past four years and against this, last year, 2013 – 14, Tirupur exports clocked Rs.18,000 Crores with the growth rate 15% in terms of Dollar and 30% in terms of Rupee. We have set a target of doubling our exports from the current level in next three years and with the ongoing export trend, I am certain that the target could be reached with the continuance of Schemes under Foreign Trade Policy and 3% Interest subvention on packing credit with retrospective effect from 1st April 2014.  

Q: During summer, frequent power cuts affect the whole trade. What could be done by the state government to overcome the issue?

AS: The power cut is one of the adverse factors for exporting units which increase the cost of production and also create problems in maintaining the delivery schedule. We have been requesting the state government to keep a special consideration for Tirupur exporting units and exempt from power cut by installing a dedicated feeder giving continuous power supply as like provided to Multi National Companies.  

Q. What are the logistical options available for exporters from Tirupur, like port connectivity?

AS: Tirupur is exporting garments through VOC Port (Tuticorin Port) (60%), Chennai Sea and Air port (35%), Cochin and other ports (5%). We have also been facing problems in ports due to non acceptance of the containers reaching after 5 pm and only feeder vessels are coming to VOC Port and it has to catch mother vessel in Colombo Port.

Q. Tell us about Tirupur Exporters Association and its goal?

AS: Tirupur exporters’ Association was setup in the year 1990, currently consisting of 927 exporting units as members and we have recently celebrated our Silver Jubilee inaugural function. Our goal is helping the exporting units for continuous development and doing their business in hassle free manner apart from development of Tirupur city.

Q. In the last few years, Bangladesh has emerged as a big challenge for India in garments export. What has to be done to keep Indian garment sector on top?

AS: Yes, of course the emergence of Bangladesh is a major concern to Tirupur and being a least developed country, they are enjoying tax free benefit in European Union apart from lower labour wages, power cost and bank interest rates. To keep our garment sector on top, we have been requesting the government to enter Free Trade Agreement with European Union and this will put us at par with Bangladesh in this tax related matter.
The cotton and cotton yarn export policy should be framed in such a way that  the Value added sector in textiles should always be ensured that they get continuous supply of yarn at optimum rate.

Q. Tell us about the volume of exports from the region and which are the countries that are regularly import from India?

AS: Tirupur has done Rs.18,000 Crores in 2013-14 and 55% to 60% of our exports destined to European Union countries, 30% to 35% to  USA and the balance to Singapore, China, Australia, South Africa, Russia, Norway, Dubai and south American countries etc.,

Q. In your view, what are the real impediments for growth of the garment sector from the region?
AS: The major impediments are higher bank interest rates, poor infrastructure facilities, increase in wages, archaic labour laws and continuance of policy for a lesser period etc.,

Q. What are the strong measures needed or to be taken up by the Government of India to keep garment sector on top?

AS: The prime importance is that the Central government should expedite for finalization of a Free Trade Agreement with European Union which will help to increase the export by 30% to 40% in European Market. The government should also take initiatives to have a Free Trade Agreement with Canada. The Schemes like MLFPS, FPS, Special Focus Product Scheme, Incremental Incentivisation Scheme should be continued and incentive should be increased to 5% for FPS Special Focus Product Scheme. The bank interest rates on packing credit should be fixed at 7% and export sector should be kept as a separate chapter in monetary policy.

Q. How do you see the Chinese threat to garment sector in coming years?

AS: The Chinese would be no longer be a major threat to garment sector in the coming years since the cost of production in China has already gone up and moreover, the garments sector in China is now facing the shortage of labour as labours are preferring to work in cell phone, telecom and electronic industries.

Q. How is the impact of closure of Dyeing units on garment sector here?

AS: After achieving zero liquid discharge, thanks to Tamil Nadu government, nowhere in the world, the impact of closure of dyeing units has become a thing of past and I can say it is more or less over.  The dyeing units are permitted to increase their operating capacity by Tamil Nadu Pollution Control Board after observing the satisfactory performance of the units. 

Q. As a Tirupur resident, what is your wish and plan for the development of the city?

AS: Tirupur, being connected internationally needs to be technologically advanced place, particularly in the communication and information technology areas. Tirupur requires  better road facilities, construction of flyovers wherever necessary, ESI hospital with good facilities, working women hostel and housing colonies for workers, dedicated power station, Stoppage of major trains in Tirupur. As it has to hope with growing population, we have requested the Central Government to include Tirupur under Smart City Programme.

Q. Tell us about the growth of Dollar City over the years?

AS: Three decades back, in 1984, the exports from Tirupur was less than Rs 10 Crores and when our Association was setup in 1990, the exports was Rs.290 Crores. We set a target of reaching Rs.1,000 crores in five years and due to efforts of our exporters, Rs.1,162 Crores was reached in the year 1993 itself. The exports got doubled in four years and reached Rs. 2,255 crores in 1997. It took another seven years to get doubled in 2004, the last year of dismantling of quota period. After quota dismantling, Tirupur exports was grown up by more than 20% and in 2006 -07, it reached Rs. 11,000 Crores. In 2007-08, due to appreciation of Rupee against Dollar, first time in the history of Tirupur, the export got declined by 10% and achieved only Rs. 9,950 Crores.
In the subsequent years due to recession in Europe coupled with demand compression and other adverse factors like increase in yarn prices, power cost, labour wages, closure of dyeing units, the exports was hovering between Rs.12,000 Crores and Rs.13,000 Crores till 2012-13. Only last year, 2013 -14, the exports got increased and recorded Rs.18,000 Crores.

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