Business and Economy of Tiruppur
Present Day Economy in TirupurThe initiative of the businessmen from Tirupur to conquer new markets enabled them to grow fast. For its export business Tirupur depends on the US and Europe. About 60% of the business is from Europe and the rest of the US. The exporters from Tirupur are trying to enter other new markets like Latin America, South Africa, New Zealand, Russia and Australia. In Tirupur there are about 6250 knitwear units. About 3 lakh people are employed directly and another 2.5 lakh people are employed indirectly by the knitwear industry in Tirupur. All the individual industrial effluent treatment plants and the common effluent treatment plants in Tirupur have already achieved zero liquid discharge. While about 500 dyeing and bleaching units are attached to the common Effluent Treatment Plants (ETP) about 150 units have their own ETPs.
Knitting in TirupurThe knitwear industry of Tirupur earns the major part of India’s foreign exchange. The leading textile giants at the global level are procuring the garments from Tirupur and the knitwear products of Tirupur are sold at all popular retail outlets across the world. The economy of Tirupur has registered an annual growth rate of 30% right from the year 1998. From Tirupur, the nearest airport is Coimbatore and the nearest sea port is Chennai. International buyers for garments made in India make their first visit to Tirupur. International buyers from not less than 35 countries, visit Tirupur every year and they are able to collect the samples of their customized garments just within 12 hours. Orders for half a million pieces will be executed within 10 – 15 days.
Garment Industry in TirupurTirupur became a garment export center during the second half of the seventies. Knitwear industry was started in Tirupur in the year 1925 and by 1945 Tirupur became a leading garment industry hub. Initially the knitwear industries in Tirupur were manufacturing only white knit inner garments. The proximity of Tirupur to Coimbatore – the Manchester of South India – also helped it to emerge as a garment manufacturing hub of international repute. Mumbai and Calcutta were the initial markets for the knitwear products from Tirupur. The purchase of white T-shirts from Tirupur by Verona, then famous Italian garment importer made the beginning of export from Tirupur. The European retail giant C&A followed Verona to Tirupur in 1981 and subsequently numerous international buyers made Tirupur as their destination for knitwear purchase.
Export Industry in TirupurIn the year 1985, when the export of garment was just starting from Tirupur, the turnover was hardly Rs.15 crores. Just within 5 years, by 1990, the turnover reached the 300 crores mark and now it is Rs.13000 crores. During the initial years Tirupur directly exported garments to Europe only. The European market was more fashion-oriented and the demand was for thousands of pieces only, so that Tirupur could easily meet the same. Initially the exporters from Tirupur were scared of the US market since the demand was very huge there. Many people who started their business in Tirupur as yarn merchants became garment manufacturers and finally exporters. Many small scale businessmen at Tirupur who started with a capital of Rs 2 – 3 lakhs 25 years ago are worth Rs 200 million today. Each of these companies employs 300 – 400 people. Since there are numerous manufacturers in Tirupur there are a lot of intermediaries between the manufacturers and the importers. The exporters of Tirupur also registered an annual growth rate of 20 – 25%. Tirupur also was badly affected by the global recession and in the year 2007 the turnover dropped drastically from Rs.11000 crores to Rs 9500 crores.
Presently, about 40% of the exports from Tirupur are to the US and 30% to Europe. The remaining 30% is to other countries. The US market has huge demand for garments of cheap quality. From Tirupur millions of pieces of cheap garments are exported to the US every year. But the export to Europe is much more profitable. The profit from the Europe business is double of the profit from the US business. The US market is as big as the Europe and UK put together.
Future of Tirupur EconomyThe global recession hit Tirupur very badly. The turnover of knitwear exports came down by 30% and many units were on the verge of closure. Thousands of people lost their jobs. There was a sharp decrease in the export to US. However, from the year 212 – 2013 things are getting better and the exporters are getting a lot of inquiries from the US. The higher the yarn price, increased production costs and increased labor costs made the garments from Tirupur much more costly. As a result, there is a sharp fall in the profit margin from exports. Apart from the rising costs, shortage of labor is also very severe now in Tirupur. There is a labor shortage of 40% in Tirupur. Apart from the rising price of yarn and the increase in dyeing costs firming up of the Indian Rupee against the USD as well as Euro also has contributed to increase in the cost of garment from Tirupur.
In spite of all these challenges the future looks bright for the trade and industry in Tirupur. The exporters of Tirupur expect a total turnover of Rs 20000 crores in the coming years in spite of the tough competition from Bangladesh and China and in spite of the escalation of costs and the shortage of labor. Tirupur is committed to growth. The ability to produce more fashionable as well as value-added products is the strength of Tirupur. Tirupur will continue with its contribution to the country’s economy.