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Tiruppur’s knitwear exporters smile as orders from the West bounce back, but a growing labour shortage has begun to cloud their sunny mood.
K M Subramanian, President of Tiruppur Exporters’ Association (TEA) tells businessline that there is a “20-30 per cent” labour shortage.
There are around 2,000 knitwear factories in Tiruppur, a township near Coimbatore. A fifth of them are large, while the rest are MSMEs. They collectively employ about 8 lakh people, of whom 2 lakh are from north India.
In 2023-24, this cluster exported ₹31,000 crore worth of knitwear and sold another ₹27,000 crore in the domestic market. Exports were lower compared with 2022-23 (₹34,350 crore), which was mainly because of slowdown in Europe and the US, in the first nine months of the year.
However, orders have increased since January 2024, up 6.4 pr cent and 5.6 per cent in February and March, respectively. However, laborers from north India, who went away during Diwali have not returned in full numbers, resulting in the shortage. Their stay back has been attributed to the availability of employment opportunities in UP, Bihar, and Odisha.
(Lalit Thukral, President, Noida Apparel Export Cluster, told businessline that the cluster (4,000 units, 1,200 exporters, ₹40,000 crore sales) was also facing “10-15 per cent” labour shortage.)
For the Tiruppur cluster, getting local labour has always been a problem.
But can’t the exporters raise wages to attract labour?
N Thirukkumaran, General Secretary, TEA, says that many companies have raised wages. Usually, the annual wage increase would be between 10 and 15 per cent, for different categories of workers, but this time, it has been around 30 per cent. So far, this wage increase has not had the desired effect, perhaps due to a variety of factors such as the elections.
Tiruppur’s sustainability advantage
Tiruppur does have an edge over other exporters (such as Bangladesh, which has duty-free access to developed markets because of its ‘least developed country’ status). “Tiruppur is ‘carbon negative’,” says Subramanian. The cluster needs 250 MW of electricity capacity, but its units have together put 1,900 MW of wind and solar capacity—the surplus is exported to the grid. Tiruppur is also ‘zero liquid discharge’ -- 130 million litres of water is recycled daily—96 per cent of it is re-used. VETRY, an NGO formed by Tiruppur businesses has planted about 2 million trees, as approved by the forest department.
Furthermore, with its social activities, such as adopting government-owned schools and running medical camps, Tiruppur would score well on the ‘social’ point, too.
On the back of this, Tiruppur expects more business from the environment-conscious developed markets, especially after Bangladesh’s LDC status expires in 2027.
Also, the industry is eager to see the successful conclusion of the Free Trade Agreement with the UK. Thirukkumaran says that at a conservative estimate, Tiruppur’s exports to the UK could increase to ₹4,500 crore, from ₹3,000 crore now.
Against this backdrop, the emerging labour shortage could hamper the industry’s prospects.
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