T-SHIRTS: DRESSING UP THE WORLD
90% of cotton tees exported from India are made in a lesser-known South Indian town called Tirupur, a.k.a. the “Dollar City”. 62% of Americans claim to own at least ten tees, and odds are high that some of them were shipped from Tirupur. 600% is the average appreciation in the price of a tee by the time it the reaches First World buyers in love with American or European tags. Numbers that make for an export idea
What do famous brands like Zara, Gap, H&M, Mango, El Corte, Desigual and Tommy Hilfiger have in common? Other than having created an indelible mark in our minds, the makers of all of these brands converge to one destination – Tirupur in Tamil Nadu – in order to get their products tailor-made and which live up to their demands of high-quality standards. Nike, Adidas, Katzenberg, Cutter & Buck, Van Heusen, Fila and Arrow also source their products from this small but vibrant town located just 47 km away from another popular industrial and textile hub popularly known as the Manchester of South India – Coimbatore.
Here is another interesting fact! Some of the top labels in the garments’ arena (especially in the T-shirts segment) have such confidence on Tirupur’s textile quality and expertise (of the manufacturers in meeting customised demands), that right from raw material procurement to producing finished products is done there. All that these importers from across the world have to do is emboss their brand labels!
Italian connection
Tirupur fits the tag of the T-shirts Capital of the world to the T. The tranquil town resonates with riveting but serene rhythm of knitting machinery emanating from thousands of apparel units dotting the topography of this dominant, if not exclusive, T-shirt domain of the country. The many sobriquets attached to it provide an eloquent narrative of this thriving town. Tirupur is also known as the knitwear capital of India – because of its contribution to knitwear exports from India and also as the Dollar City – because of its’ position as an export hub.
From being an obscure town with cottage knitting units to becoming a world famous cotton garments manufacturing location, the metamorphosis, like every success story, has a very interesting genesis. According to official records, Tirupur’s direct exports started with Italy. Verona, a garment importer from Italy, came to Tirupur in 1978 through Mumbai-based exporters to buy white T-shirts. He was so impressed with the quality of the product that he came to Tirupur the following year for further purchases. Verona can also be considered as Tirupur’s brand ambassador, since he was instrumental in bringing European business to Tirupur. In 1981, European retail chain C&A started placing orders and the trickle to Tirupur soon became a big pour with big brands and retail outlets from across the globe, especially from US and Europe, queuing up to procure garments from the manufacturing units located there.
Numbers talk
The 27-square-kilometer city, with a population of around 7 lakh, has about 6,000 units involved in knitwear production. In fact, Tirupur could be also referred to as the only exclusive export city with an entire industry oriented towards manufacturing garments. Most units operating in Tirupur are WTO compliant, which is a prerequisite for exports. Statistics substantiates Tirupur’s hallowed status as the most sought after destination for importers. According to Raja Shanmugham, Chairman of Confederation of Indian Industry (Tirupur District), the city accounts for almost 65% of India’s cotton garment exports. “Garment exports business from Tirupur is valued at Rs.18,000 crore,”. Most units here are involved in cotton T-shirt production. In fact, a lion’s share, i.e., around 80% of all garments exports from Tirupur comprise of cotton T-Shirts. According to the Ministry of Commerce (GoI), cotton T-shirts exports from India in FY2014 were worth $1,740.25 million, of which Tirupur’s share is estimated to be about 80-90%. The garment industry in Tirupur recorded exports worth Rs.8,646.52 crore in the first nine months of FY2014, registering a 30% y-o-y growth. In fact, the performance of just one player in the T-shirts’ segment – Eastman Exports Global Clothing Pvt. Ltd. – gives an idea of the demand for the Tirupur brand. Eastman clocked in a business of $250 million during FY2014.
T-SHIRTS: DRESSING UP THE WORLD
90% of cotton tees exported from India are made in a lesser-known South Indian town called Tirupur, a.k.a. the “Dollar City”. 62% of Americans claim to own at least ten tees, and odds are high that some of them were shipped from Tirupur. 600% is the average appreciation in the price of a tee by the time it the reaches First World buyers in love with American or European tags. Numbers that make for an export idea
What do famous brands like Zara, Gap, H&M, Mango, El Corte, Desigual and Tommy Hilfiger have in common? Other than having created an indelible mark in our minds, the makers of all of these brands converge to one destination – Tirupur in Tamil Nadu – in order to get their products tailor-made and which live up to their demands of high-quality standards. Nike, Adidas, Katzenberg, Cutter & Buck, Van Heusen, Fila and Arrow also source their products from this small but vibrant town located just 47 km away from another popular industrial and textile hub popularly known as the Manchester of South India – Coimbatore.
Here is another interesting fact! Some of the top labels in the garments’ arena (especially in the T-shirts segment) have such confidence on Tirupur’s textile quality and expertise (of the manufacturers in meeting customised demands), that right from raw material procurement to producing finished products is done there. All that these importers from across the world have to do is emboss their brand labels!
Italian connection
Tirupur fits the tag of the T-shirts Capital of the world to the T. The tranquil town resonates with riveting but serene rhythm of knitting machinery emanating from thousands of apparel units dotting the topography of this dominant, if not exclusive, T-shirt domain of the country. The many sobriquets attached to it provide an eloquent narrative of this thriving town. Tirupur is also known as the knitwear capital of India – because of its contribution to knitwear exports from India and also as the Dollar City – because of its’ position as an export hub.
From being an obscure town with cottage knitting units to becoming a world famous cotton garments manufacturing location, the metamorphosis, like every success story, has a very interesting genesis. According to official records, Tirupur’s direct exports started with Italy. Verona, a garment importer from Italy, came to Tirupur in 1978 through Mumbai-based exporters to buy white T-shirts. He was so impressed with the quality of the product that he came to Tirupur the following year for further purchases. Verona can also be considered as Tirupur’s brand ambassador, since he was instrumental in bringing European business to Tirupur. In 1981, European retail chain C&A started placing orders and the trickle to Tirupur soon became a big pour with big brands and retail outlets from across the globe, especially from US and Europe, queuing up to procure garments from the manufacturing units located there.
Numbers talk
The 27-square-kilometer city, with a population of around 7 lakh, has about 6,000 units involved in knitwear production. In fact, Tirupur could be also referred to as the only exclusive export city with an entire industry oriented towards manufacturing garments. Most units operating in Tirupur are WTO compliant, which is a prerequisite for exports. Statistics substantiates Tirupur’s hallowed status as the most sought after destination for importers. According to Raja Shanmugham, Chairman of Confederation of Indian Industry (Tirupur District), the city accounts for almost 65% of India’s cotton garment exports. “Garment exports business from Tirupur is valued at Rs.18,000 crore,”. Most units here are involved in cotton T-shirt production. In fact, a lion’s share, i.e., around 80% of all garments exports from Tirupur comprise of cotton T-Shirts. According to the Ministry of Commerce (GoI), cotton T-shirts exports from India in FY2014 were worth $1,740.25 million, of which Tirupur’s share is estimated to be about 80-90%. The garment industry in Tirupur recorded exports worth Rs.8,646.52 crore in the first nine months of FY2014, registering a 30% y-o-y growth. In fact, the performance of just one player in the T-shirts’ segment – Eastman Exports Global Clothing Pvt. Ltd. – gives an idea of the demand for the Tirupur brand. Eastman clocked in a business of $250 million during FY2014.
(Read exclusive interview: Our USP is the ability to cater to dynamic markets – Raja M.Shanmugham, MD, Warsaw International; Chairman of CII Tirupur District Council)
Truly global
So, what is so unique about Tirupur T-Shirts that attracts world’s top brands? According to N. Chandran, Vice-President, Tirupur Exporters’ Association and Chairman, Eastman Exports Global Clothing Pvt. Ltd., “The industry here is famous for lighter weight, soft fabrics, higher count fabrics, multi processed products apart from being equipped with all kinds of prints, applications, embroideries, finishes like performance finishes and washes. We are also capable of handling any quantum. Moreover, we have a reliable supplier base, which makes it all the more convenient. All these qualities make it the most sought after destination.”
The quality of Tirupur T-shirts could well be gauged from the fact that its major markets are the very fastidious and high quality-conscious Europe and US. “Besides EU, the volume business is from American retailers and importers. Approximately 50% of the business is from countries other than Europe. Now all big retailers/importers from the EU have started thinking of procuring their merchandise from the fully equipped compliance factories here after the Rana Plaza accident in Bangladesh. They also want to de-risk themselves by splitting orders across different countries. In fact, if the India-EU Free Trade Agreement (FTA) is signed, our business will jump due to lower tariff,”
Speaking about the source of raw material required for the manufacturing of the garments, Chandran says, “All the raw materials are being sourced from our own factories, except mélanges and dyed yarns which are being sourced from countries in the northern hemisphere. Some sewing and packing trims are being sourced from Far East and we get them in accordance with the customers’ specifications.” The production is so prolific that the average quantum ranges from an average of 1.5 lakh pieces a month in a small unit to a mind boggling millions of pieces in big units. “Our company’s capacity is about 8 million pieces a month,” adds Chandran matter-of-factly.
A win-win game
As far as market equations are concerned it is a win-win proposition for both the manufacturer and the buyer. “The FOB price of some of the best T-shirts made in Tirupur is about $7.5. But in US retail markets, it is sold at about $45-50! On an average, our products are priced five to six times higher by our US buyers,” B. Vijayaragavan, MD, B. S. Apparel and Executive Member, Tirupur Export Knitwear Industrial Complex (TEKIC).
(Read exclusive interview: Interview - Cotton pricing policy is impacting our growth – B.Vijayaragavan, MD, B.S.Apparel)
The industry is still in a process of revival and rejuvenation after it experienced a slump in production following the Madras High Court directive in 2011 to close down all pollution causing units, which resulted in operations in about 173 units coming to a halt. Later, after the units installed Effluent Treatment Plants and restarted production, the industry is back on track to retain its high-volume track record. According to Milton Ambrose John, Vice President, TEKIC and Managing Director, Cotton Blossom (India) Private Limited, “The units here have achieved Zero Level Discharge (ZLD) and we will ensure that it is sustained and maintained.”
Paradox
There are also other issues faced by Tirupur’s T-shirt manufacturers, which if addressed by policymakers, would take this industry to an altogether different level. According to Chandran, “In India, the cost of fibre is very high and we do not have different varieties. Hence, if we set zero import duty on fibre, we can have all facilities from spinning and knitting to weaving process to make world-class fabric. We can compete with other countries like China and Indonesia. Currently this is a big problem.”
And, here is the paradox in government policy. “The manufacturers here are forced to purchase cotton and yarn from outside since local prices are very high. The irony is that China produces yarn from cotton imported from India and we buy the same at a price that is cheaper than the prevailing price in India. If India stabilises cotton and yarn prices to a level lesser than that abroad, our production costs can be reduced considerably,” John points out and adds “I would also like to suggest to the government to ship cotton bales from Gujarat by sea route to Tuticorin Port. Presently, we are transporting cotton bales by road which is very costly and adding to our production cost. In fact, the government should launch an exclusive shipping facility for this purpose.”
The T-shirts industry in Tirupur is facing another rather unusual problem – manpower scarcity and job-hopping by workers! In fact, this problem is affecting productivity levels to such an extent that many have expressed concerns about not being able to meet demand. According to John, “There is a huge demand for T-shirts from international buyers, but we are not able to produce the required quantum because of shortage of manpower, specifically skilled. The problem is further aggravated by continuous job-hopping by workers.” In fact, the manpower problem is so grave in this labour intensive industry that output from almost all units is well below capacity. Supply is constantly trying to play catch up to demand. “We have the capacity, expertise and raw material resources to meet the high and consistent demand, but the industry here is encountering almost a 50% manpower shortage, both skilled and unskilled,” B. M. Boopathi, CEO, TEKIC
(Read exclusive interview: Our quality is much superior to that of Bangladesh - B.M.Boopathi CEO, TEKIC)
The labour shortage is also reflected in the fact that many of the units outsource their works to households. Of course, it also exhibits the fact that the tradition of knitwear and embroidery is an art embedded in hearts and culture of the inhabitants of this town. Interestingly, one reason for the increasing manpower crunch is also the fact that many individuals, after working for a few years at various units in Tirupur, end up becoming entrepreneurs themselves! And why not? On an average, a T-shirt maker in Tirupur makes a profit of about Rs.200 for every T-shirt exported.
Be that as it may, Tirupur continues to shine on India’s export map despite such challenges. Although T-shirt manufacturers from Tirupur compete with exporters from manufacturing giants like China and countries with “Least Developed Country” status like Bangladesh, which enjoy zero duty advantage, their ability to adapt quickly to ‘dymanic markets’ make them popular among foreign buyers. Apart from that the presence of all allied units within the 27 km radius of this city helps it shorten the production period and meet the deadlines for deliveries.
After a brief lull (in FY2013 exports from Tirupur witnessed a drop of 7% y-o-y, thanks to the Madras High Court directive to close down pollution causing units), exports from Tirupur are back on track reporting 15 growth y-o-y in FY2014. And with the Finance Minister proposing, in Union Budget 2014, to increase the duty free entitlement for import of trimmings, embellishments and other specified items from 3% to 5% of the value of their export for readymade garments only makes the situations better for exporters of T-shirts from India.
The next time you flaunt a branded tee, chances are that it may be from your very own “Dollar City”. Doesn’t make you feel good, but for once, spare some admiration for the local artisan who made it!
Truly global
So, what is so unique about Tirupur T-Shirts that attracts world’s top brands? According to N. Chandran, Vice-President, Tirupur Exporters’ Association and Chairman, Eastman Exports Global Clothing Pvt. Ltd., “The industry here is famous for lighter weight, soft fabrics, higher count fabrics, multi processed products apart from being equipped with all kinds of prints, applications, embroideries, finishes like performance finishes and washes. We are also capable of handling any quantum. Moreover, we have a reliable supplier base, which makes it all the more convenient. All these qualities make it the most sought after destination.”
The quality of Tirupur T-shirts could well be gauged from the fact that its major markets are the very fastidious and high quality-conscious Europe and US. “Besides EU, the volume business is from American retailers and importers. Approximately 50% of the business is from countries other than Europe. Now all big retailers/importers from the EU have started thinking of procuring their merchandise from the fully equipped compliance factories here after the Rana Plaza accident in Bangladesh. They also want to de-risk themselves by splitting orders across different countries. In fact, if the India-EU Free Trade Agreement (FTA) is signed, our business will jump due to lower tariff,”
Speaking about the source of raw material required for the manufacturing of the garments, Chandran says, “All the raw materials are being sourced from our own factories, except mélanges and dyed yarns which are being sourced from countries in the northern hemisphere. Some sewing and packing trims are being sourced from Far East and we get them in accordance with the customers’ specifications.” The production is so prolific that the average quantum ranges from an average of 1.5 lakh pieces a month in a small unit to a mind boggling millions of pieces in big units. “Our company’s capacity is about 8 million pieces a month,” adds Chandran matter-of-factly.
A win-win game
As far as market equations are concerned it is a win-win proposition for both the manufacturer and the buyer. “The FOB price of some of the best T-shirts made in Tirupur is about $7.5. But in US retail markets, it is sold at about $45-50! On an average, our products are priced five to six times higher by our US buyers,” B. Vijayaragavan, MD, B. S. Apparel and Executive Member, Tirupur Export Knitwear Industrial Complex (TEKIC).
(Read exclusive interview: Interview - Cotton pricing policy is impacting our growth – B.Vijayaragavan, MD, B.S.Apparel)
The industry is still in a process of revival and rejuvenation after it experienced a slump in production following the Madras High Court directive in 2011 to close down all pollution causing units, which resulted in operations in about 173 units coming to a halt. Later, after the units installed Effluent Treatment Plants and restarted production, the industry is back on track to retain its high-volume track record. According to Milton Ambrose John, Vice President, TEKIC and Managing Director, Cotton Blossom (India) Private Limited, “The units here have achieved Zero Level Discharge (ZLD) and we will ensure that it is sustained and maintained.”
Paradox
There are also other issues faced by Tirupur’s T-shirt manufacturers, which if addressed by policymakers, would take this industry to an altogether different level. According to Chandran, “In India, the cost of fibre is very high and we do not have different varieties. Hence, if we set zero import duty on fibre, we can have all facilities from spinning and knitting to weaving process to make world-class fabric. We can compete with other countries like China and Indonesia. Currently this is a big problem.”
And, here is the paradox in government policy. “The manufacturers here are forced to purchase cotton and yarn from outside since local prices are very high. The irony is that China produces yarn from cotton imported from India and we buy the same at a price that is cheaper than the prevailing price in India. If India stabilises cotton and yarn prices to a level lesser than that abroad, our production costs can be reduced considerably,” John points out and adds “I would also like to suggest to the government to ship cotton bales from Gujarat by sea route to Tuticorin Port. Presently, we are transporting cotton bales by road which is very costly and adding to our production cost. In fact, the government should launch an exclusive shipping facility for this purpose.”
The T-shirts industry in Tirupur is facing another rather unusual problem – manpower scarcity and job-hopping by workers! In fact, this problem is affecting productivity levels to such an extent that many have expressed concerns about not being able to meet demand. According to John, “There is a huge demand for T-shirts from international buyers, but we are not able to produce the required quantum because of shortage of manpower, specifically skilled. The problem is further aggravated by continuous job-hopping by workers.” In fact, the manpower problem is so grave in this labour intensive industry that output from almost all units is well below capacity. Supply is constantly trying to play catch up to demand. “We have the capacity, expertise and raw material resources to meet the high and consistent demand, but the industry here is encountering almost a 50% manpower shortage, both skilled and unskilled,”
The labour shortage is also reflected in the fact that many of the units outsource their works to households. Of course, it also exhibits the fact that the tradition of knitwear and embroidery is an art embedded in hearts and culture of the inhabitants of this town. Interestingly, one reason for the increasing manpower crunch is also the fact that many individuals, after working for a few years at various units in Tirupur, end up becoming entrepreneurs themselves! And why not? On an average, a T-shirt maker in Tirupur makes a profit of about Rs.200 for every T-shirt exported.
Be that as it may, Tirupur continues to shine on India’s export map despite such challenges. Although T-shirt manufacturers from Tirupur compete with exporters from manufacturing giants like China and countries with “Least Developed Country” status like Bangladesh, which enjoy zero duty advantage, their ability to adapt quickly to ‘dymanic markets’ make them popular among foreign buyers. Apart from that the presence of all allied units within the 27 km radius of this city helps it shorten the production period and meet the deadlines for deliveries.
After a brief lull (in FY2013 exports from Tirupur witnessed a drop of 7% y-o-y, thanks to the Madras High Court directive to close down pollution causing units), exports from Tirupur are back on track reporting 15 growth y-o-y in FY2014. And with the Finance Minister proposing, in Union Budget 2014, to increase the duty free entitlement for import of trimmings, embellishments and other specified items from 3% to 5% of the value of their export for readymade garments only makes the situations better for exporters of T-shirts from India.
The next time you flaunt a branded tee, chances are that it may be from your very own “Dollar City”. Doesn’t make you feel good, but for once, spare some admiration for the local artisan who made it!