Tamil Nadu's Tiruppur gain or lose from the Bangladesh crisis
Until a month ago, the textile hub of Tiruppur in western Tamil Nadu was protesting against the Union government's free trade agreement (FTA) with Bangladesh, as cheap textiles were being imported without customs duty, which dampened Tiruppur’s business. However, with the civil unrest in Bangladesh, the future suddenly looks brighter.
But the change cuts two ways. While Tiruppur happily looks forward to more business, the labour cost would be high for them. On the other hand, those Indians who opened units in Bangladesh to take advantage of the cheap labour are now at a loss due to the Bangladesh crisis.
India exports cotton, cotton yarn and fabrics to Bangladesh that amount to 17 per cent of India's textile export. Trucks and consignments are stranded. There is a break in the supply chain.
Even if India gains 10 to 11% of Bangladesh’s export quantity because of the crisis, there would be an increased earning of 300-400 million dollars per month in the Indian hubs, especially Tiruppur. Indian share in textile export has been between 1.3 billion to 1.5 billion dollars per month, while Bangladesh was exporting to the value of 3.5 to 3.8 billion dollars per month.
The Bangladesh unrest has caused a drop in global textile volume and India would have to immediately fill in the gap, especially with Christmas approaching. Tiruppur accounts for 50 per cent of India’s textile exports and the hub will need assistance in filling up this short term gap, from the state and union governments.
Tiruppur was facing competition from China and Bangladesh, especially because of the FTA. Import of knitted fabrics and knitwear garments had grown manifold, to nearly 60 per cent.
Tiruppur was incurring 60% loss in the domestic market too because of cost of production, including high cost of labour, that made the products costlier than the textiles in Punjab, Gujarat, West Bengal and Odisha. The garment manufacturers have been urging the state government to set up a committee to protect its domestic market and also promote synthetic and man made fabric (MMF), by encouraging setting up of such units.
But the Bangladesh crisis has given Tiruppur an opportunity to provide quality textiles for global consumption and sources in Tiruppur say that the units in this hub have the capacity to provide additional 300-400 million dollars worth of products to the world immediately.
Those able to fill the gap will obviously gain, and might even be able to command good prices for their produce. But those who bet on cheap labour in Bangladesh and set up units there and sourced material from India have lost their competitive advantage.
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