India's garment export capital singed by Russia-Ukraine war

Chennai: Tiruppur Exporters Association (TEA) president Raja A Shanmugham has said that the industry which is often referred to as the hosiery capital of South India and the Manchester of South is facing an acute crisis.

He said that the heavy increase in raw cotton prices had already affected the business and now the Russia-Ukraine war has taken the business to a new low. Shanmugham, who is himself exporting to Europe, said that the market was slowly recovering from the Covid-19 crisis and they hope that the war will be over and prices of raw cotton will come down so that the industry gets back to normal providing employment to 6 lakh labourers and earning huge foreign exchange for the country.

The industry has a projected revenue of Rs 33,000 crore from the export business and Rs 32,000 crore from the domestic market with a total market cap of Rs 65,000 crore. He said that unless the government supports the exporting units and strictly monitors the raw cotton pricing, the industry will face the heat even after the war between Ukraine and Russia ends.

In an interview, he expressed his concerns as well as expectations.

Responding to a question on war impact on Tiruppur garment exports, Shanmugham said that the garment industry is facing the heat, but still the full impact is yet to be felt and we have to face it. Right now the already lingering container problem has got further escalated creating problems in exporting our merchandise as there is a huge shortage of containers. Moreover, all the European brands do have garment stores both in Russia and Ukraine, now closed due to economic sanctions. Most of the reputed international brands have outsourced their work in Tiruppur and this has led to our industry getting crippled. Two things have a direct impact, the lack of containers and the showrooms of major European brands in Russia and Ukraine being shut down. Another issue that affects the market is the increase in fuel costs in Europe due to the war which has disrupted the spending power of the Europeans. The fuel prices have increased by 30 to 40 per cent after the war.

The prolonged war has created a fear factor among all, particularly in the European region. Everyone is praying for it not escalating any further. More than this buying garments is getting relegated to the last option. This will severely affect the quantum of trade in the coming season. He further expressed concerns over the rising production cost due to surge in cotton prices. "The increase in cotton prices is a major reason for the hike in production costs. Other than that almost all the input costs have increased to an unprecedented level and have led to a major hike in production costs," he further added.