TIRUPPUR: The second wave of Covid hit Tiruppur’s garment exporters before they could brace for it. The first wave eroded exports worth Rs 2,500 crore, and we don’t have data from 2021-2022 yet to assess how badly the second wave struck them. But now, they’re living in fear of a third wave.
“Most exporters didn’t expect the second wave so early, and were worried when the lockdown was enforced. Some companies received orders but couldn’t execute them. Many had their orders cancelled. As confusion prevailed, exporters re-negotiated business deals with buyers to tide over the second wave,” Apparel Export Promotion Council (AEPC) chairman A Sakthivel explains.
But in April-May, during the peak of the second wave, Tiruppur’s garment exporters started to feel the heat. The Tiruppur Exporters Association (TEA) sought financial stimulus measures from Finance Minister Nirmala Sitharaman for garment units under MSMEs. It also sought a moratorium on all loans for at least three months, and additional liquidity support of 20 per cent to revive MSMEs in the ready-made garment sector.
For the first time in the history of the Tiruppur garment industry, exports worth about Rs 2,500 crore were eroded in 2020-21 (see chart), due to the first wave of Covid, as per data from the TEA. Many exporters predict a decline in export growth in 2021-22 too, due to the second wave.
“In early February-March 2021, European markets had reopened, and placed orders for summer wear. But officials at garment units here were shocked by the second wave and the lockdown. Several exporters had only completed half of their orders, so buyers started questioning them,” TEA treasurer P Mohan recalls.
The first wave was different as many buyers and European importers too felt the heat of the pandemic, and were willing to adjust their business deals. But during the second wave, many garment companies were forced to send their goods via air cargo, since ships weren’t available, Mohan adds. “In 2019, the air freight charge was just Rs 80 per kg, but it’s now Rs 280-300. In order to retain their clients, many garment units were forced to take this route, which ruined their profit margin.”
Besides this, there was a shortage of containers. The waiting time to get containers at all ports globally increased, and freight charges increased due to a shipping crisis, a garment exporter points out. “Last year, the freight charge for a large container was $800, but is now over $8,000. Many cargo shipping firms have reduced their services in Asian countries,” the exporter adds.
Making matters worse, several thousand migrant workers at garment units returned to their hometowns (see chart) during the second wave. “Recalling the first wave, they panicked and left. In early May, buyers and European companies started demanding their goods. The workers were asked to return as orders worth several thousand crores were pending. But there were no trains, so garment units had to bring them on flights,” says Kumar Duraisamy, CEO of Eastern Global Clothing, one of the top buyers in Tiruppur.
“One of the top players in the market, Classic Polo Group, brought back more than 400 workers from Bihar and West Bengal. During the second wave, more than 6,000 migrant workers must have been flown from Bihar to Tiruppur,” he adds. However, many labourers from small garment units didn’t return to Tiruppur. The big units offered food and hostel facilities, which helped them retain workers from the North and East, a prominent exporter points out.
However, only a minority of garment units in Tiruppur are big. Most of them have clients from the US and Europe, and in order to retain them, the small units take loans. On the other hand, the bigger units faced bigger losses as they had larger deals. However, they are hopeful about the future, and aim to get more deals before the financial year ends in March 2022, says TEA treasurer P Mohan.
Vaccination mess adds to woes
One of the serious problems amid the lockdown was that migrant workers were unable to get vaccinated in Tiruppur district. At first, they thronged primary health centres, but this made it difficult for the locals to get vaccinated at the earliest.
To combat this, the district administration made it mandatory to produce a voter’s ID card to get vaccinated. This left the migrant workers in a fix as their documents didn’t have their local addresses. Besides, there were allegations that some health officials were diverting vaccines to private garment companies. A contract employee from the health department was suspended for this.
Ajay Kumar (31), a migrant worker from Bihar, who works as a supervisor at a unit on Mangalam Road in Tiruppur, says, “When the lockdown was relaxed, I returned home to celebrate Diwali. Though I returned to Tiruppur, some of my colleagues didn’t, though their employers promised to pay them if they stayed here.”
Abhishek (23) another native from Bihar, adds, “My employer refused to pay me after I returned home during the first wave. A few months ago, I came back to Tiruppur after an employment agency offered me work at another company. But we were shocked to hear another lockdown was beginning. Although my new employer promised to offer us food during the lockdown, many of my friends returned to Bihar.”
Why Covid second wave was worse than the first
During the first wave, many foreign buyers too felt the heat of the pandemic, and were willing to adjust their business deals. But during the second wave, many garment companies were forced to send their goods by air, says TEA treasurer P Mohan