12 November 2008, Tirupur - The economic recession sweeping the Western world has started taking its toll on the knitwear industry in Tirupur. According to The Hindu, about 20,000 workers are to lose their jobs as a consequence.
Exports have plummeted steeply in the first half of this financial year and projections for the remaining half of the year apparently look unenthusiastic. Speaking to The Hindu, Mr A. Sakthivel, President of the Tirupur Exporters Association, said about 20,000 workers employed in different segments of the manufacturing chain in the knitwear cluster would lose their jobs very soon owing to the market crunch."Retrenchment has become imperative as exports for the first six months of this financial year ending September 30 has declined to Rs. 5,050 crore from Rs. 5,350 crore registered during the corresponding period last fiscal," he said. In terms of earnings in US dollars, the downturn was pegged at 10 percent.
Mr Sakthivel told the Hindu that there had been a 30 per cent decline in orders placed with the Tirupur knitwear cluster and many units have now reduced the number of shifts and resorted to a five-day week routine following a drop in the orders.
Mr Sakthivel called for the government to come out with an aid package to help the exporters out of the predicament. He said that interest on pre-shipment and post-shipment credits levied by banks should be brought down to six per cent without any link to Prime Lending Rate and that a moratorium on repayment of term loans should be imposed for a period of at least two years.
Mr Sakthivel said duty drawback rates on cotton-based knitwear products should be enhanced from 8.8 per cent to 11 per cent. He told The Hindu that the cluster being primarily made up of small and medium scale enterprises, venturing into new markets in Far East and even in the domestic segment instead of the US and Europe looked tough owing to lack of any branding.
