Today i wanted to talk about the troubles in the MSME and SME sector since I’m from Tamil Nadu I would like to talk about what is happening in the textile sector in western Tamil Nadu
The heart of the western Tamilnadu textile sector today is Tirupur. which is the world capital for T-shirts one and three t-shirts separate in the world is made in Tirupur. Today employees from Tirupur and companies in thriving dominate even companies that manufacture t-shirts in Bangladesh there are a lot of Tamil experts living in Bangladesh and that is the kind of skill that Tirupur has but I have been highlighting for several months the problems faced by the Tirupur industry.
Tirupur has had an issue because the government has not invested in it. and we do not have a proper textile policy from the local state government. A lot of people from Coimbatore and Tirupur have been setting plants outside the country but it is not possible for everyone In Tirupur to go and set up a plant abroad or move their manufacturing facility.
2020 and 21 have been extremely difficult times for the hoist industry in 2020 after the arrival of corona (covid-19) what happened is that migrant labor on which Tirupur is extremely dependent of deserted the town and fed the state it took nearly four months for employees from west Bengal & Jharkhand to come back to Tirupur. the city lost about three to four months of production they were stringent knocked home all over the world this meant reduced orders in fact Europe was shut down leading to England was in a lockdown during Christmas also and the USA was also facing a slowdown, therefore, there was a lot of loss of orders in Tirupur also.
Once the problems of orders and manpower got sorted out Tirupur had another problem to take care of Tirupur had a shortage of containers because of the hair-brained idea of the government to delay Chinese imports this meant that containers did not come to India.
this is because India is not in the main shipping lane and containers have to be transit from Colombo to Kochin or madras or even cochin since imports were not coming in empty containers were not coming to our ports therefore finding containers to export textiles abroad was very difficult.
containers had to be hired at twice the rates of normal rates these were the challenges faced by throughput apart from this those who were enjoying cash credit facilities from banks had to move heaven and earth to get additional facilities sanctioned by the government the special schemes announced by the state and central government by asking banks to lend guaranteed by the central government, were given to companies which were only live on February but already companies were in ICU.
By february of 2020 accounts which were delayed by more than one month interest in feb 2020.
were not given the extra loan and overall banks were very stingy in extending credit in fact credit expanded in the entire country by six percent only also input credit for GST is not available for exporters, because they pay all the GST bills and they have to claim the money from the central government and the central government took its own time in returning the money so you had a labor shortage a container shortage and a working capital shortage in this place.
To add insult to injury what has happened in Tirupur is a very nasty thing the government of India and its wisdom put out a 10% duty on import of cotton which made imported cotton very difficult while this was going on the government of India forgone to ban exports of cotton. young cotton and rabanya are the major components for the manufacture of icd in Tirupur the prices of cotton yarn have shot up to 345 rupees a kg making it very difficult to meet production costs.
People in Tirupur tell me the anchors are going up three to four times a month this means they are unable to quote. because an export cycle works that I have to make a quotation receive a purchase order then manufacture and ship the entire cycle lasts two months, and before I get my payment it is five months. so if I have to quote today on yarn prices today and the order comes through I manufacture 145 days later and the on prices have gone up my margins are waked up originally it was possible to make 25 to 30 percent when one was manufacturing voiced today The manufacturing margin has come down to five to 10 percent at the additional cost most companies are operating at zero cost textile is a very labor-intensive industry. it really for every one crore invested it creates nearly 100 jobs India.
which is talking about not losing its demographic dividend and wants to create more jobs for its youth needs to concentrate on value-added textiles before if it wants to employ these people what is the reason for young prices to go up most of the yarn mills are set up in north India and today are working at 50 to 60 percent of capacity since there is no ban on exports.
yarn today from India is primarily being sent to China and Bangladesh and to some extent in Vietnam these countries are able to buy yarn from north India because it is easier and cheaper to shipyard to Bangladesh than to bring it to Tirupur because of freight cost. thus young mills find it easier to export to Bangladesh and china and since the shortage of labor even in the mills, there is reduced production which is driving up costs. unless we ban exports and incentivize our mill manufacturers to supply yarn to Tirupur even till poor will die in untimely death like the mills of equal mature died about for a decade back