The textile industry cannot catch a break. It has been caught in the crossfire of a trade war, followed by a conflict in West Asia that drove up fuel and commodity prices. Then came a cotton shortage, prompting the govt to grant yet another last-minute extension of duty-free imports. Now the industry is bracing for another tariff-related uncertainty with the revival of Section 301 (The US Trade Act). But India’s progress towards implementing bilateral trade agreements with the UK and the EU, along with expectations of a deal with the US, offers a silver lining.Tamil Nadu’s home textile and garment industry hails trade deals as having enormous potential, as suppliers can tap the existing relations to ramp up exports. Incremental growth in exports is expected in the next few years. “Historically, we have been facing higher tariffs than competing nations such as Bangladesh, Vietnam and China and this bridges the cost disadvantages,” says Durai Palanisamy, chairman of the Southern India Mills Association and executive director of the Pallava Group.He expects up to 5% export volume growth after the deals kick in and a gradual increase as suppliers build capacity. “In the industry, usually companies add capacity only after demand visibility. There is currently a strong pull from brands diversifying into Bangladesh and China,” he said.However, to make the best use of the improved market access, the industry, most of them small and medium-scale enterprises clustered in the Western region, needs to step up investments to achieve economies of scale.“The orders would drive investments in machinery, improve focus on productivity and labour skilling and nudge the industry towards more value addition. We need to strengthen the cotton value chain with integration, guaranteed access to inputs and clarity in import duty structure. The industry’s value chain is highly fragmented with various small players. Building ready-to-cut fabric ecosystems, with integrated facilities, including dyeing, bleaching, finishing, will improve turnaround time and unit economics. The state should incentivise spinning and weaving players to do that so other players can focus on garmenting,” he said.Adding to the global woes, Tamil Nadu’s units face higher attrition, labour crunch. States such as Madhya Pradesh and Odisha are gaining traction, pairing aggressive incentives with their demographic advantages. It also lags in man-made fibre (MMF)-based garments.While they dominate the global apparel trade, Tirupur’s exports are estimated to have about 15% MMF and MMF blends.“Tamil Nadu should tap its strengths, long-standing industry networks, and legacy ecosystem to move to high-value manufacturing and should improve the cotton ecosystem initially to take advantage of our strengths while investing in MMF capabilities, which could take years to mature,” said S K Sundararaman, MD of Shiva Texyarn.“TN is becoming more expensive than other Indian states, and with intensifying shifting competition, we need to invest more in technology and value addition, including technical textiles. While the state policy is directionally positive, the govt needs to ensure there is no hike in power tariffs or minimum wages. Tirupur needs to renew its entrepreneurship drive to make this happen,” he said.The upcoming PM MITRA Textile Park in Virudhunagar could change things, with 177 acres out of 1,052 acres having been allotted to 16 investors. These include large and medium Indian players, accessories suppliers, and key suppliers to global apparel brands. Deepak Jacob, MD and CEO of Guidance, said that the park will bring in an investment of `2,067 crore and is likely to generate close to 13,000 jobs.“The Tamil Nadu government is making efforts to bring in anchor investors from across the globe. We are also working to encourage investments from global players in technical textiles, MMF garments, and non-leather footwear manufacturing.”
