TIRUPUR, India — Over the last 20 years, this small town in southern India has grown from a nondescript hamlet to become the country’s knitwear capital, providing more than a quarter of the nation’s garment export revenues. Home to more than 5,000 garment factories — mostly small to medium-size — the city is a sourcing base for both Indian retailers and global brands, including Puma and Gap.
But in the last year, Tirupur has seen an 8 percent decline in production and the industry’s executives have been forced to examine ways to ensure its future.
Revenues of the Tirupur-based garment industry were 240 billion rupees, or about $4 billion at current exchange rates, in the financial year 2017–18, out of India’s total apparel export revenues of $17 billion. Nearly 40 percent of Tirupur’s production is exported to the European Union, 35 percent to the U.S., and the remainder to other parts of the world, including Russia.
A. Sakthivel, a large and powerful man, owner of Poppys Knitwear and former president of the Tirupur Exporters’ Association (TEA), has been keeping a close eye on the changing ethos in the city for the last 35 years, making representations to state and central governments, and keeping in touch with the tightly knit community that owns the city’s factories.
Like many people in this area, he is driven by sentiment and faith — his office is blessed by dozens of idols, and the community is known to encourage a strong clan sentiment to help each other grow. He discussed some of the reasons for the town’s declining production, with global factors being key.
“A key difference has been the systems of preferences that our neighboring countries have, giving them a lot of growth opportunities,” Sakthivel said. “This is true of Bangladesh, Cambodia, Myanmar and Sri Lanka. Bangladesh, for example, also has government support and factory size — and in both aspects Tirupur is unable to compete. While China was declining, their invisible invasion was happening in all these countries. Chinese are very effectively using their advantage in technology and the investment factor and they are clubbing those with other advantages in countries which have a special advantage of being underdeveloped, or better export terms with the United States or the European Union. That makes the prices from India higher than the neighboring countries, allowing them to grow vastly at the cost of the Indian industry.”
Tirupur is just over an hour’s drive from the nearest airport at Coimbatore, with a broad, well-planned highway and Uber and plentiful, conventional taxi connections. But traffic within Tirupur is scattered and heavy, the factories woven into the city’s fabric, some in residential areas, but almost all are in stand-alone factory buildings.
The city’s roads are dotted with shops selling ready-made knitwear for $1 or $2, with the surplus providing plentiful shopping for local residents and visitors, and areas like Kaderpeth famous for the surplus sold at both wholesale and retail rates.
These shoppers aren’t complaining about a fall in production or sales. But factory owners are concerned.
Raja M. Shanmugham, president of the TEA, explained that the fall in production is also largely a result of macroeconomic changes within India, which have deeply impacted small industries. “Demonetization was a rude shock, followed by the goods and service tax. Though it is good for the nation but the shock wave has created a fear psychosis across the spectrum. India has had to undergo these two shocks. That has been evident in the 8 percent slippage. 2015–16 was a growth of 8 percent, so put together there was a 16 percent visualized fall in the industry,” he said.
What is it that made Tirupur special, to enable it to overtake most other regions in the country, including Ludhiana, Bangalore, and the New Delhi area?
“Nothing special is the special factor,” Shanmugham told WWD, describing what has been the dramatic growth of the city into a competitor for knitwear with the earlier northern city center of Ludhiana, and then the leader. “We had no water, no roads; Tirupur is devoid of all natural and artificial advantages. There is no seaport or airport for trade activities, there was no drinking water available — we had to source it from a distance. Even the road connectivity was not good. The entire area was a drought-prone area. Despite all these factors, it has grown. One of the reasons for this growth has been that it acts like a real cluster,” he said.
Sivaswamy Sakthivel, executive secretary of the TEA, has a different perspective from A. Sakthivel, the former president of TEA who shares the same last name. An erudite and educated man who starts out each day scanning the changes in technology and shares these on several WhatsApp groups to ensure a reach to all TEA members, he described how this success has been driven by both the cluster concept and the interconnected nature of the community, a unique feature of India and the region.
“The coexistence of micro-, medium- [size firms] and corporate structure, with a cluster system means that no single factory needs to be able to do everything,” he said. Factories that work closely with each other in the form of a cluster for dyeing, a cluster for sewing and a cluster for finishing make it possible to start with lower capital and investments, and to help each other grow.
The other part is the domination of the Gounder community in this sector, one that has largely been associated with agriculture; hard, sustained labor, and strong links with one another. “It is an epitome of opportunity thrown open to all the stakeholders equally. There is no barrier of info here, with cell phones, within no time the message gets spread. So we can be totally enlightened on any relevant subject, helping each other, informing each other, marrying within themselves, giving loans and encouragement, and sharing news of technology, business, clients, new styles,” he said.
Marriages within the community strengthen it further, and meetings for festivals, marriages and deaths ensure the community continues to share ideas and thoughts on progress.
Cotton has been another strength for the region but, in recent years, a weakness as well. While products containing cotton remain in high demand worldwide, Tirupur’s focus almost totally on the fiber has begun to be a limitation as other types see increasing demand on global markets.
“In Tirupur, we have limited ourselves to 100 percent cotton products. We did not do product enlargement and ranges. Now from the association point of view we are making a lot of efforts to impart knowledge for product diversification. Handling cotton production is an open secret in Tirupur, the knowledge is shared with each other, so everyone can get the nuances of how to handle it. But to switch to a new product you need more knowledge,” Shanmugham noted, a point he has been quick to push as TEA president.
Although the labor force has been growing fast in Tirupur, with many of the estimated 600,000 workers being migrants from different states across India, labor unions have traditionally not been a factor here.
“The key reason here is that there is one motto that has been followed through the decades: ‘Yesterday’s laborer is today’s owner.’ No center in the world can claim that. Here 100 percent of the established factories have this as the genesis,” said Shanmugham, whose father was an agriculturist, and who has built his own factory, Warsaw International, in the same way.
This story is amplified across the city.
K.G. Ganeshan, partner in Swell Knit, Tirupur, whose factory is on the Velampalayam main road, is one of many such stories of ownership and growth. Born in Theni village in the Madurai district, west of Tirupur, Ganeshan used his first failure — an inability to gain admission into a training institute — to become an apprentice to a tailor. “I used to earn one rupee a week,” he recalled. He was the only son, with two sisters who had yet to be married, an unemployed father, and a mother who worked for daily wage labor work. “I wasn’t working for the money, but rather for the experience,” he said. After three months, he was earning 10 rupees a day, and with his savings, a year later he started his own tailoring shop.
Eight years later, having paid for the marriages of his sisters, he moved to Tirupur with a single bag, and started searching for a job in a factory. “I wanted the social respect and economic improvement,” he said. “I knew pattern making, but had no experience in an export house.”
A chance meeting at a political event led to a job at an export house.
“Even as a tailor, all my mind was on the management part,” he said, and in his second job at KPR Exports he quickly rose up the ranks from pattern maker to sampling and quality manager, and eventually to general manager.
After 14 years, he opened his own factory, in partnership with a former colleague, and now produces for the Italian and U.K. markets. “Some people start small and wait for their factories to grow. We started as-is from the first day — we started out with our own mail server,” he said.
In the intervening years, he finished not only high school, but also got a master’s degree in political science.
“My dream is that I want to transfer knowledge to the people who are interested in the textile field and also give work to at least 10,000 people,” he said.
However, the growing labor force in Tirupur has brought new issues and parameters to be addressed.
“Poverty is the root cause of many evil issues in India,” explained A. Aloysius, founder and director of SAVE (Social Awareness and Voluntary Education), a non-governmental organization.
“There was so much pressure on factories against child labor many years back,” he said. “We have all done a lot of work on this, and the outcome is that the Tirupur industry is child labor-free — that is a kind of benchmark acknowledgement. We have been using the community, the school authorities, the government to see that children [are protected] and have been working closely with the industry organizations like Tirupur Exporters’ Association and the Southern India Mills’ Association (SIMA) for this. Now the issues are more related to migrant workers, to ensure proper housing and work conditions for them — a lot of housing has been structured and provided — and education for the children of the migrant workers,” he said.
The goal to double the Tirupur industry’s output in the next few years brings issues related to containment, and civic growth as well. “There will be 400,000 to 500,000 people more, how will these be encampused? This is the time to think these things through very carefully,” he said.
Global and local nongovernmental organizations have been carefully examining labor issues in the industry. The schemes by employers to help young migrant workers accumulate savings for their wedding — the Sumangali scheme — came in for criticism, alleging harassment or reneging on the promise of payment by employers. The Fair Wear Foundation (FWF) noted in a report that the biggest problem was lack of payment of overtime and undocumented overtime, and that part-time workers and seasonal workers receive poor wages, bonuses and other benefits.
Shanmugham contended these issues were continually being addressed and that issues related to the knitting mills were often confused with those in garment factories in Tirupur. “We follow compliance guidelines very carefully,” he claimed.
Even as there are issues regarding the treatment of workers, observers say that India has an edge in global markets compared to some of its rival manufacturing nations.
“Tirupur has an advantage because it is close to the spinning mills, and India itself has the most potential of all its neighboring countries because we have the entire value chain,” said DK Nair, former chief executive officer of the Confederation of Indian Textile Industry (CITI), which represents all the sub-sectors of the textile industry. “Both Bangladesh and Vietnam — which are growing faster than India — are dependent on imported fabrics. We have our own fabrics, our own yarn, our own cotton, our own polyester and the question still is, can we take over the market that is being vacated by China?”
Meanwhile, India’s retailers are seeing double-digit growth, creating a buoyant domestic market. Tirupur itself is sometimes a detour for local travelers to shop and buy knitwear in all its forms.
The markets are spread throughout Tirupur, with streets of retailers selling wholesale and direct retail with rows of shirts, dresses and innerwear with signs for 10 rupees (15 cents), 30 rupees (45 cents) and more, and colorful baskets filled with easy pickings for shoppers. Abbas Ahmed, a shop owner in the Khaderpet area, is quick to point out that children’s wear is booming in the area, and that no one can leave without acquiring a bag full.
Despite its declining production over the last year, it is clear that global sourcing executives continue to fly in from their vantage point in Bangalore, that Indian retailers are upping their orders, and that Tirupur has plans to retain its title as India’s knitwear capital.
“We are looking ahead,” said Sivaswamy Sakthivel, over an extra cup of coffee. “We are looking at wool and synthetic. Grasim is setting up here, tied up with Woolmark. We have our own National Institute of Fashion Technology (NIFT) here invested in knitwear know-how, which has a skill division and an atelier. There is the Atal Incubation Centres coming up to focus on developing product technologies, training, conferencing and incubating work space. A lot of start-ups are investing in new technology and looking at new trends.
“The industry here is known to rise above the constraints and always looks toward the future,” he said.