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Over 100 apparel manufacturing units shut in Erode
16 Nov '11
2 min read
Over 100 apparel manufacturing units in and around the city of Erode in the south Indian State of Tamil Nadu have shutdown owing to lack of government support, shortage of manpower, the rise in prices of yarn and the decrease in the value of the Indian rupee against the US dollar.
“The scene is not limited to Erode, but is visible all over the region in cities like Tirupur, Coimbatore, etc. About 40 percent of the garment factories are already closed down and the ones that are running have reduced their production capacities,” Mr. S Sivananthan, Secretary, Textiles and Garments Exporters Association – Erode, informed fibre2fashion.
Explaining the reasons for closure of garment manufacturing units, he said, “Before 2000, several facilities were extended by the government to garment exporters, but these have been gradually reduced. For example, we are now getting only 6 percent as drawback. So, lack of government support is the main reason for the closure of units. Instability in the yarn prices, devaluation of Indian currency with US dollar and labor shortage are the other reasons.”
Comparing the scenario with other countries, Mr. Sivananthan said, “Our competitors are China, Vietnam, Cambodia, Bangladesh and Sri Lanka. In these countries, the government is supporting the garment export industry a lot. There is no fluctuation in the dollar price for at least six months for the exporters, who also get subsidy for cotton.”
“For instance, the Bangladesh Government provides subsidy for importing cotton, which lowers the purchase price of cotton. Also, the manufacturing cost is very low in Bangladesh. In addition, exporters get some incentives. In India, on the other hand, there is no encouragement to exporters similar to that given by the governments in Vietnam, Cambodia and Bangladesh,” he stated.
“After the global economic meltdown of 2008, there has been a 10-15 percent decline in exports, which is decreasing even more every year. Hence, most of the exporters are now closing their apparel production units and diversifying their businesses to other areas. Textiles and Garments Exporters Association – Erode is repeatedly reminding and writing letters to the Textiles Ministry to intervene and take effective steps to stop the closure of more garment units,” he revealed.
“The scene is not limited to Erode, but is visible all over the region in cities like Tirupur, Coimbatore, etc. About 40 percent of the garment factories are already closed down and the ones that are running have reduced their production capacities,” Mr. S Sivananthan, Secretary, Textiles and Garments Exporters Association – Erode, informed fibre2fashion.
Explaining the reasons for closure of garment manufacturing units, he said, “Before 2000, several facilities were extended by the government to garment exporters, but these have been gradually reduced. For example, we are now getting only 6 percent as drawback. So, lack of government support is the main reason for the closure of units. Instability in the yarn prices, devaluation of Indian currency with US dollar and labor shortage are the other reasons.”
Comparing the scenario with other countries, Mr. Sivananthan said, “Our competitors are China, Vietnam, Cambodia, Bangladesh and Sri Lanka. In these countries, the government is supporting the garment export industry a lot. There is no fluctuation in the dollar price for at least six months for the exporters, who also get subsidy for cotton.”
“For instance, the Bangladesh Government provides subsidy for importing cotton, which lowers the purchase price of cotton. Also, the manufacturing cost is very low in Bangladesh. In addition, exporters get some incentives. In India, on the other hand, there is no encouragement to exporters similar to that given by the governments in Vietnam, Cambodia and Bangladesh,” he stated.
“After the global economic meltdown of 2008, there has been a 10-15 percent decline in exports, which is decreasing even more every year. Hence, most of the exporters are now closing their apparel production units and diversifying their businesses to other areas. Textiles and Garments Exporters Association – Erode is repeatedly reminding and writing letters to the Textiles Ministry to intervene and take effective steps to stop the closure of more garment units,” he revealed.
Fibre2fashion News Desk - India
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