Textile Industry In Tamil Nadu Affected By Increased Competitiveness Of Other States; High Cost Of Power And Labour Among Reasons: Report

News about the proposed incentives in Gujarat's draft textile policy has been extensively shared among textile and apparel manufacturers in Coimbatore and Tiruppur, who are worried about investors moving away the textile industry in other states is becoming more competitive, according to a report by The Hindu.

The report quoted a spinning mill owner in Coimbatore as saying, “We will lose not just investments and capacities, but expertise available in this region of Tamil Nadu, if there is a flight of investments to other states.”

While owners of two integrated garment units were planning to invest in Madhya Pradesh, two more are eyeing Bihar, stated the report.

An industry spokesperson in Coimbatore explained that Maharashtra and Gujarat, which are major fabric clusters, have an advantage in textile processing due to the ready availability of raw material like cotton. Furthermore, these states employ marine discharge instead of zero liquid discharge, making the process easier. Additionally, they benefit from subsidised power costs.

Palaniswamy, a garment manufacturer in Tiruppur, mentioned that some large manufacturers in the district are considering outsourcing their orders to manufacturers in West Bengal or other northern states where costs are lower. He explained that these industries are trying to manage their production costs and are thus exploring possibilities in states that provide incentives.

The escalating cost of power, high labour expenses, and the necessity to source raw materials such as cotton or synthetic fibre from other states are making the textile industry in Tamil Nadu less competitive. Industry insiders who spoke to The Hindu suggested that Tamil Nadu also needs to develop a competitive textile policy to bolster the sector.

K Selvaraju, the Secretary General of the Southern India Mills' Association, said that if the current situation persisted, approximately 30% of the textile units in Tamil Nadu would have to shut down within the next three years.

Suggesting that the state government should provide a one-time modernisation subsidy, Prabhu Dhamodharan, the convenor of the Indian Texpreneurs Federation stated that it was crucial to reduce the cost of manufacturing in order to regain the state's market share in yarn exports.