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Rediff News  All News  » Business » Slowdown, powercuts sting Tirupur's textile exporters

Slowdown, powercuts sting Tirupur's textile exporters

May 07, 2009 04:09 IST
As the sun slowly sets behind the skyline of factory buildings, a group of women enters the Vasantham Textiles mill in this industrial town. They position themselves behind their respective sewing machines to stitch T-shirts. But many machines in another corner of the large hall remain unattended.

"Four months ago, I had 70 workers in my mill. But now I employ only 45," says Selva Kumar, the owner of Vasantham Textiles.

Tirupur, the biggest textile hub in the country, is a new Lok Sabha constituency after the delimitation. But, ahead of the elections, it is plagued with problems ranging from job losses to plants for effluent treatment.

Tirupur Exporters' Association sources say 25,000 to 30,000 people have already lost their jobs and returned to their native places. Factory owners and workers, however, peg this figure above 50,000. Workers who still have not lost their jobs are living on reduced salaries because the production is down 40-50 per cent in many units.

It is not just the global economic slowdown that has affected Tirupur's textile industry and its workers. In addition to the recession in the export market, Tirupur has been facing severe power cuts over the past one year, forcing mill-owners to reduce shifts and retrench the extra workforce.

"We have been facing 5-6 hours of power cuts everyday for the past one year. The cost of electricity is Rs 4.70 a unit. If we run our factories on diesel, the cost rises to Rs 11 to 12 a unit. That makes a huge difference, especially when we are competing with China in the global market," says S Sakthivel, executive secretary, TEA.

Power cuts have taken a toll of other sectors, too. "The sale of air conditioners has dipped 25 per cent," says Manoj Kumar, who runs an electronic goods shop here.

The power policy of the Karunanidhi government has evoked feelings of regional deprivation, an example of Tamil Nadu's dilemma -- how rapid industrialisation can become a political liability in times of an economic slowdown.

In the past one year, many new industries have come up near Chennai. Domestic power consumption in the state has also gone up. "Since the Chennai area has many high-profile MNCs, the present government supplied uninterrupted power to that area even as we had to suffer power crises. The government didn't touch Chennai as it didn't want to tarnish its image with the MNCs. During the DMK regime, there has been little effort to raise power generation," says a senior functionary of TEA.

Tirupur, where the first knitwear unit was set up in 1925, today contributes 80 per cent to India's total cotton knitwear export. There are 6,250 units involved in various operations of the industry and export grew from Rs 9.69 crore in 1984 to Rs 11,000 crore in 2006-07. But then came the fall. In 2007-08, exports dipped to Rs 9,950 crore. "In 2008-09 fiscal again, we won't be able to reach Rs 10,000-crore mark," says Sakthivel.

He says the stimulus packages announced by the government are "inadequate" and more sops like the abolition of the fringe benefit tax and service tax are required. "We can't export our taxes to the customers. China is giving these benefits to its exporters. We should be exempted from VAT straightaway," Sakthivel adds.

Now, with a week left for the polling day, Tirupur is facing fewer power cuts. But, M P Ghani, manager in Link Exports, says this is because of the elections. "As soon as the elections are over, the usual routine of 5-6 hours of power cuts will resume."

Selva Kumar adds: "The government has recently imposed a penalty, which we will have to pay if we use more than 2,000 units of electricity. Last month, my bill was Rs 14,000. But I had to pay a penalty of Rs 6,000."

Saubhadro Chatterji in Tirupur