India’s textile hub of Tirupur is facing a revival of fortunes after nearly two years with a flurry of orders from the US and UK, helped also by political instability in neighbouring Bangladesh. With this, the city’s 5,000 apparel export units are buzzing with activity with their factories operating at 95% capacity.
K M Subramanian, president of Tirupur Exporters Association (TEA) said new apparel buyers from the UK are seeking samples in anticipation that a much-awaited Free Trade Agreement (FTA) will be signed soon between India and the UK. Last week, the Union commerce ministry said talks on the FTA will resume early next year.
“The units are getting orders from the US for the upcoming Spring season. A few months ago, the units were operating at 60-65% capacity. But that has changed now,” said Subramanian.
He said some US-based companies who were earlier sourcing from Bangladesh are now tapping Indian suppliers.
“In FY24, Tirupur had clocked a revenue of Rs 35,000 crore which is likely to increase to Rs 40,000 crore in FY25,” he added.
India’s apparel exports surged by 35% in October to $1.22 billion from $908.78 million a year earlier, as per the commerce ministry.
Punit Lalbhai, vice chairman and executive director of textile maker Arvind Ltd, said during the company’s Q2 earnings call, “As far as garments go, currently, anybody who is a credible garment player, who has capacities, will be full because the demand scenario is pretty good. And India is a preferred location, where people want to diversify their sourcing metrics, too. So, that explains why everybody has good visibility and a good order book.”
The US had significantly reduced garment imports after the pandemic. “The US pipeline of garments is shallow, and they are putting in fresh orders. Some orders are coming from Bangladesh too because of the ongoing political unrest,” said Sanjay Jain, chairman of the Indian Chamber of Commerce National Committee on Textiles. “We are expecting to achieve around $18.5-$19 billion of apparel exports in FY25 from $16 billion in FY24 and the growth momentum will continue for at least two years in the near term,” he said.
Sudhir Dhingra, owner of Gurugram-based exporter Orient Craft noted that even though orders meant for Bangladesh are being diverted to India, many Indian textile makers do not have the necessary infrastructure to handle large orders.
“The big ones will be able to take orders. But the smaller ones, which are large in numbers, may not be able to do so. The opportunity from Bangladesh is huge, and the Indian apparel industry can leverage it only if the government gives incentives like Production Linked Incentive (PLI) for garment manufacturing units and banks come forward to give working capital loans to the smaller units,” he said.
In the earnings call, Lalbhai had said “Vietnam and Bangladesh were already approaching saturation as (it was a case of) too many eggs in one basket for many customers. I think from that perspective, this unrest in Bangladesh only reinforces the need to have more sourcing locations. And India ticks a lot of boxes amongst the future candidates for further diversification.”
Commenting on the India-UK FTA in an earnings call recently, Sivaramakrishnan Ganapathi, vice chairman and managing director, Gokaldas Exports had said, “And it is positive, definitely more positive for me, because we already are working with some UK-based clients in anticipation, and they will only increase their sourcing. But regardless of that, I am seeing that, with problems in Bangladesh, I am finding even UK-based customers who currently enjoy a 12% delta in import duty between India and Bangladesh because Bangladesh goes duty-free are looking at outsourcing more from India. So, we are seeing traction coming from there which will only accelerate if the FTA happens.”
“US apparel imports are now trending up over the previous year. After a major period of excess inventory, which the brands were consciously trying to liquidate, inventory holdings have reached a low level and brands have started purchasing again,” said Ganapathi.
