The appreciation of the rupee against the dollar has had a major impact on this knitwear town. The innumerable ‘Wanted’ signboards that could earlier be seen in every nook and corner of the town have disappeared.
With textile units on a capital expansion spree, the need for labourers – skilled and others – was constantly on the rise. But the change in rupee value has brought with it a pall of gloom, even fear, in the minds of entrepreneurs and labourers.
Heavily dependent on the U.S. market, the knitwear exporters are now looking to Europe. Even leading export houses have started aggressive marketing efforts in Europe, which however is a relatively small market compared to the U.S. Product marketing has suddenly assumed an important place. The capacity expansion drive has slowed down, or even come to a halt.
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Even advertisements in dailies seeking those ranging from merchandisers to tailors and production managers have disappeared.
“For the last eight years, we had faced no problem on the work front despite expansion. Now we struggle to book fresh orders. We do not engage workers two days a week. If the trend continues, our 1,800 workers will get work only for two days a week,” says M. Ravi, managing director of the Rs.130-crore Network Clothing Company.
M. Chandran, State secretary of the Centre of Indian Trade Unions, confirms that many units face a similar problem. “Some factories are giving work for only one shift against the normal practice of one-and-a-half a day. This leads to wage cuts.”
“This is the first time we are confronted with the possibility of a negative growth rate. Buyers are not ready to pay more. So far, around 8,000 workers have lost their jobs and the number will touch 50,000 by March,” says A. Sakthivel, president of the Tirupur Exporters’ Association.
Negative growth
Exports from Tirupur registered an annual growth rate of around 20 per cent over the last decade. “This year we expect a 10 per cent negative growth. At this rate we cannot sustain the value of exports at the usual Rs. 11,000 crores a year,” adds Mr. Sakthivel.
He wants the Union Government to cut the interest rate to 6 per cent for loans to exporters and exempt them from paying service tax and Fringe Benefit Tax. The Government should discourage the flow of foreign institutional investment, which according to him is directly linked to rupee appreciation. The Centre should find a mechanism to refund State levies, he says.
High interest rates for term loans have affected job workers who have invested heavily on machinery. Another exporter says there is no dearth of enquires but the price is the problem.
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