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The Southern India Mills’ Association

Committed to Foster the Growth of the Textile Industry

Tirupur’s textile industry struggling to stay afloat

When 2009 arrived, 40-year-old DM Kumar, a garment entrepreneur in Tamil Nadu’s textile hub of Tirupur, was caught unawares. His Rs 10-crore business was drying up thanks to the global economic meltdown. Clients from foreign shores stopped orders as their pockets emptied. Kumar struggled through until 2011, when the second blow fell. The Madras High Court, in February 2011, decreed that all dyeing units in Tirupur would have to shut down for violating pollution norms. They would only be reopened when they implemented zero-discharge protocols in order to protect the surrounding farmlands and rivers.
“The dyeing industry is the backbone of the textile industry in Tirupur,” said Kumar, chief executive of Eastern Global Clothing. “Smaller players like us usually work with limited capital. We generally put in 25 per cent of our own capital and the remaining 75 per cent comes from institutional loans and credit from our suppliers. My Rs 10-crore company was forced to drastically scale down to Rs 2-3 crore. Small timers simply went out of business,” he stated. Textile makers began to send their goods to Ludhiana, Kolkata and Ahmedabad for dyeing since most units in Tirupur were forced to shut down. This meant delays, quality shortcomings and upset customers. Transport by air freight alone comprised 10 per cent of the final fabric price. Industry leaders say that 25-30 per cent of garments in Tirupur were airlifted between 2011 and 2014 to avoid delays. Most of us were forced to bring the dyed textile by air freight due to huge delays,” said Kumar. “Air freight meant we had to pay cash on the spot. Since we were new customers for dyeing units in the other states, they demanded cash-and-carry. We had a terrible fund crunch,” he added.
The price of one T-shirt when exported worked out to $3. The same T-shirt when sold in the domestic market fetched $1. “Beg, borrow or steal, I had to export,” said Kumar. “I had to minimise the losses.” State government records show that close to 40,000 families working in the garment units surrendered their ration cards and headed back to their native villages in the southern districts in search of employment. In reality, though, says industry, the numbers could be double the official records. Growth of the sector was severely arrested, with export turnover remaining stagnant for about four years, hovering around Rs 12,000 crore.
Limping Back
The grit and enterprise of the textile makers of Tirupur though is legendary. Reeling from the blow by the Madras High Court, large and small businessmen quickly came together to find a solution. There was now an urgent need to invest in pollution control norms since their livelihoods depended on it.
Honestly none of us knew anything about pollution or the harmful effects of the effluents when we began our businesses way back in the 1970s,” said S Nagarajan, president of the Dyers Association of Tirupur. “We got together and shared knowledge.
Through a series of trial and error, we borrowed technology from various parts of the world and came up with our own version of effluent treatment plants,” he said.

These effluent treatment plants are of two types — Individual Effluent Treatment Plants and Common Effluent Treatment Plants (IETPs and CETPs, respectively). Larger manufacturers set up IETPs to process their waste, while smaller units came together to route their polluting effluents through a single CETP. Today, there are 18 CETPs in Tirupur. The first stage of treatment of the polluting effluent — the biological stage involving bacteria to break down the dyes — was copied from a similar method used in Italy. The second stage — reverse osmosis to cleanse the water — was picked up from desalination plants.
The third stage — evaporation, to remove the sludge — was a local innovation. These effluent treatment plants are, to put it simply, a result of South Indian ‘jugaad’.
We are now recycling 92 per cent of the water that is discharged as effluent,” said a proud Nagarajan. “We are able to reuse the same water a thousand times without a problem. We are also recycling the salt used. Only 0.5-1 per cent of the dye used is removed in the treatment process and sent for use in cement factories. We have attained zero liquid discharge,” he said. These effluent treatment plants, he says, have helped conserve 10 crore litres of water a day.
Costly Conservation
All of this though has come at a price. Grants from the Centre and the state government of Tamil Nadu totalled Rs 300 crore. The state government also arranged for interest-free loans to industry to the tune of Rs 200 crore. Out of a total of Rs 1,070 crore, close to Rs 600 crore was pumped in by industry and private loans from banks. Tirupur’s industrialists have managed to pay back most of the loans. Now, a sum of Rs 250 crore (inclusive of interest) remains pending with banks, which are threatening to shut down the effluent treatment plants if loans are not repaid.
Banks have started issuing notices to seize assets now,” said Nagarajan of the Dyers Association of Tirupur. “All 18 CETPs are of NPA (non-performing asset) status in the banks,” he added.
Nobody in the government took responsibility to help us out,” said R Raj Kumar, managing director of Best Corporation, who is also a joint secretary of the Tirupur Exporters’ Association. “Everything fell on the entrepreneurs. The government should have at least told us what to do, helped us out in terms of research and development. Industry is willing to be responsible and comply,” he said.
Industry leaders say that the cost of setting up these effluent treatment plants is equal to the cost of setting up a new textile-making unit itself. Power usage too has shot up as a result of the treatment plants — 50 per cent of power used by industry goes into these plants alone. As a result, the industry as a whole, they say, has become less competitive due to a forced additional 4 per cent hike in the final garment price.
Tirupur’s entrepreneurs had pinned their hopes on a grant of Rs 200 crore made to them by the 13th Finance Commission. With the change in government at the Centre, the Finance Commission was disbanded before the funds could be disbursed and the NITI Aayog came into being. “We have been asking the government to release the Rs 200 crore promised to us by the erstwhile Finance Commission,” said Nagarajan of the Dyers’ Association of Tirupur. This would help us tide over the crippling bank loans.” The textile industry also wants a ‘green tag’ to be issued by the Centre for textiles being exported from Tirupur.
“Our international clients who are leading garment brands are now insisting on compliance with environmental norms and we have managed to do the compliance all by ourselves,” said R Gopalakrishnan, chairman of Royal Classic Mills, a Rs 600-crore firm. “Green tags would help us greatly in marketing our product internationally and bring in more clients,” he said.
Tirupur’s textile industry is also hoping for quick implementation of Free Trade Agreements (FTAs) with Europe and the US so as to enable their goods to avail of a 9-12 per cent slash in import duties in these countries. “If these Free Trade Agreements are signed, Tirupur’s capacity will simply not be enough,” said V Elangovan, member of the executive committee of the Apparel Export Promotion Council (AEPC), a body sponsored by the Union textiles ministry. “Today, Tirupur’s export turnover is over Rs 21,000 crore. FTAs can take it to Rs 1 lakh crore in just three years. We are requesting the Centre to implement at least sectoral agreements for the garment sector if the FTAs are taking too long,” he added.
A Global Outlook
Tirupur contributes 75 per cent to India’s total garment exports. India currently stands at sixth position globally in terms of garment exporting countries. With the double whammy faced by Tirupur in 2009 and 2011, smaller countries like Bangladesh and Vietnam have raced ahead, say industry experts.
“We are losing a fortune to Bangladesh,” rues Elangovan of the AEPC. “Bangladesh is moving towards $50 billion in garment exports while India is still at $23 billion,” he said. Elangovan adds that the textile industry is the second largest employer after agriculture in the country. And in the bustling little town along the banks of river Noyyal, small and large entrepreneurs speak the same language
Pakistan and Bangladesh are our direct competitors,” argued DM Kumar of Eastern Global Clothing. “Earlier there used to be only two seasons — summer and winter. Now leading global brands are placing orders for 16 seasons in a year! Can you imagine the volume of business? Every four weeks a new delivery has to be made. We can put India on the global trade map,” he said. As discussions on the Union budget get underway, Tirupur’s industrialists hope that in an election year, the Centre and the state would look favourably upon their gritty sector and give it a much-needed leg up for the future.