Disintegrating fabric of textile exports
In this concluding part of a three-part series on how the ‘Super Rupee’ has wrecked the local economies and lives of workers, ET reporters travel to Ahmedabad and Surat to document the travails of the synthetic fabrics and garment industry.
By TNN |
AHMEDABAD/ SURAT: In India, all the major textile exporting hubs — be it Tiruppur, Surat, Bhiwadi or Panipat — like to be billed as the Manchester of East, a good half-a-century after the north western English ‘Cottonopolis’ lost its global pre-eminence. But going by the current plight of all the Indian textile towns, they could be resembling Manchester in more ways than one.
If it was World War II for the mills in Manchester, rising rupee could be death knell for Manchesters of the East. In Ahmedabad, the first Indian city to draw Manchester comparisons, export-oriented units have lost 40% of their business in the last six months as the rupee appreciated nearly 15% against the US dollar, and are now at the mercy of European importers.
“The dollar fluctuation has led to massive reduction in shifts. The six-days-a-week shifts has been reduced to four and in many cases night shifts have been discontinued altogether, affecting thousands of labourers across the state,” says Maskati Kapad Market president Mahajan Rati Shah.
In Surat, exporters point out that they are planning to reduce the shift hours from 24 to 15 hours in a day that would bring down the workforce by nearly 70,000 in and around the city. The synthetic hub in Surat weaves around 900 crore meters of fabric worth Rs 15,000 crore per annum. Around 80% of it in the form of sarees and dress material are supplied to the key markets like Maharashtra, Madhya Pradesh, Karnataka, Punjab, Tamil Nadu, Cochin, Punjab and Delhi.
Surat exports synthetic fabrics worth Rs 1,000-1,200 crore to markets such as US, Middle East and Europe every year. According to Raju Arora, MD, Orchids Overseas, a leading exporters of synthetic fabrics; “Export of synthetic fabrics has become vulnerable due to the rising rupee. It’s tough to find orders from the foreign buyers as they are not ready to re-negotiate. Exports could fall by Rs 500-crore by the end of this year.”
Orchids’ Mr Arora also points out the fact that fabrics sourced from Japan, Thailand and China are now cheaper than India. Having suffered heavy losses, companies have begun changing their business strategy. “Considering we have limited number of big buyers, we could do nothing to check our losses.
However, now several players are dealing in Indian currency and fixing a minimum cost of delivery to check such fluctuations,” says Sunil Gandhi, president of Gujarat Garment Manufacturer’s Association. Several garment, yarn and fabric manufacturers have focused their attention on the domestic market. “Earlier if the ratio of export to domestic market was 20:80, now it is 10:90 if not even less,” he adds.
“We are targeting Europe in a big way,” says Paresh Thummar, a synthetic fabric exporter. Around five to six big exporters from Surat had participated in the recently-concluded India Fashion and Fabric fair held in Germany. “European buyers are keen on buying the fabrics manufactured in the synthetic hub in Surat. We are looking at strengthening the business ties with the European buyers in the near future. That’s the only way out of this mess,” says Mahesh Agarwal of Vikram Knittex, another large exporter of synthetic fabrics in Surat.
If it was World War II for the mills in Manchester, rising rupee could be death knell for Manchesters of the East. In Ahmedabad, the first Indian city to draw Manchester comparisons, export-oriented units have lost 40% of their business in the last six months as the rupee appreciated nearly 15% against the US dollar, and are now at the mercy of European importers.
“The dollar fluctuation has led to massive reduction in shifts. The six-days-a-week shifts has been reduced to four and in many cases night shifts have been discontinued altogether, affecting thousands of labourers across the state,” says Maskati Kapad Market president Mahajan Rati Shah.
In Surat, exporters point out that they are planning to reduce the shift hours from 24 to 15 hours in a day that would bring down the workforce by nearly 70,000 in and around the city. The synthetic hub in Surat weaves around 900 crore meters of fabric worth Rs 15,000 crore per annum. Around 80% of it in the form of sarees and dress material are supplied to the key markets like Maharashtra, Madhya Pradesh, Karnataka, Punjab, Tamil Nadu, Cochin, Punjab and Delhi.
Surat exports synthetic fabrics worth Rs 1,000-1,200 crore to markets such as US, Middle East and Europe every year. According to Raju Arora, MD, Orchids Overseas, a leading exporters of synthetic fabrics; “Export of synthetic fabrics has become vulnerable due to the rising rupee. It’s tough to find orders from the foreign buyers as they are not ready to re-negotiate. Exports could fall by Rs 500-crore by the end of this year.”
Orchids’ Mr Arora also points out the fact that fabrics sourced from Japan, Thailand and China are now cheaper than India. Having suffered heavy losses, companies have begun changing their business strategy. “Considering we have limited number of big buyers, we could do nothing to check our losses.
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However, now several players are dealing in Indian currency and fixing a minimum cost of delivery to check such fluctuations,” says Sunil Gandhi, president of Gujarat Garment Manufacturer’s Association. Several garment, yarn and fabric manufacturers have focused their attention on the domestic market. “Earlier if the ratio of export to domestic market was 20:80, now it is 10:90 if not even less,” he adds.
“We are targeting Europe in a big way,” says Paresh Thummar, a synthetic fabric exporter. Around five to six big exporters from Surat had participated in the recently-concluded India Fashion and Fabric fair held in Germany. “European buyers are keen on buying the fabrics manufactured in the synthetic hub in Surat. We are looking at strengthening the business ties with the European buyers in the near future. That’s the only way out of this mess,” says Mahesh Agarwal of Vikram Knittex, another large exporter of synthetic fabrics in Surat.
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