Why Walmart’s the ace up Tiruppur’s RMG sector sleeve
After a 17 per cent decline in April, ready-made garment (RMG) exports of India’s textiles showed signs of recovery in May. Exporters in Tiruppur indicated a rise in rupee terms during the month, even though it may take another month or so for volumes to snap back to normal. Walmart, H&M Hennes & Mauritz AB (H&M), Tommy Hilfiger, and Target are among global majors placing orders from the Knitwear Capital of India.
“Although export value is up, volumes are still 5-10 per cent down,” said K M Subramanian, president, Tiruppur Exporters’ Association.
According to sources, sales are likely to bounce back by June. Notwithstanding waning demand, Subramanian said manufacturing wherewithal in Tiruppur has risen by at least 20 per cent, riding on the coat-tails of government policies.
“In terms of volume, it is 5-10 per cent less; in rupee terms, it has increased. We are getting advance orders from Walmart, H&M, Tommy Hilfiger, and Target,” he added.
Of the total knitwear exports of ~63,239 crore in 2022-23, over 54 per cent, or ~34,350 crore, came from Tiruppur itself. The region is now betting on the recent mega announcement by Walmart.
The Arkansas-headquartered retail corporation’s Chief Executive Officer Doug Mcmillon announced in early May that his company would meet the sourcing target of $10 billion from India each year by 2027.
“Walmart has sanctioned sourcing of $10 billion goods from India. Whatever it buys from India, about 50 per cent may come from Tiruppur. From June, growth will increase by 10-15 per cent,” said A Sakthivel, president, Federation of Indian Export Organisations.
He added that with US inflation tapering down and fuel prices descending, order flow may see a turnaround. “Fuel and gas price rises were predominantly affecting Europe’s purchasing power,” he said.
In April, India’s RMG exports were down 17 per cent in rupee terms to ~9,929 crore, compared with ~1,2002 crore during the same period in the previous financial year. In dollar terms, RMG exports were down 23 per cent to $1.211 billion.
“More orders are coming from the US, but Europe is yet to pull through. The primary reason for the decline in demand is the Russia-ukraine stand-off and inflation in those countries, leading to a slowdown in purchases,” added Subramanian.
In all-india knitwear exports, the share of the US comes to about 32 per cent, followed by European Union countries (30 per cent), the UK (9 per cent), and others (30 per cent).