Tirupur exporters concern over UK’s exit from EU

UK’s decision to exit from the European Union which in turn impacted the currency, worries exporters from the tiny town of Tirupur as many of the exporters exports around Rs26,000 crore of knitwear. According to A Saktivel, president, Tirupur Exporters Association, it will be temporary but in the long run this will help them since UK will support more which it could not when it was part of the EU.

EU is a major destination for readymade garments (RMG) export from India. In 2015-16, total RMG exports from India was Rs 1,11,236 crore, of which EU’s share was 36.97%.

The apparel and made-ups industries are hoping the Indian textile industry will only stand to benefit from Brexit given the rupee devaluation against pound and euro.

In the immediate, Indian apparel exporters should only benefit from this and exports to UK and Europe will be more remunerative for them due to rupee devaluation, said Rahul Mehta, president of Clothing Manufacturers’ Association of India (CMAI).

Exit of the UK will also open doors for some more business on the long run, feels the Association. For example, UK has been buying high-end products from Italy. Before EU, it used to be from countries like India, which has been enjoying EU member status in tax concessions and others.

Now that UK has exited, it would attract customs duty and other things, which will make Italian products costlier and that would open doors for countries like India.

Moreover, even EU could now look at India favourably with regard to FTAs and review the same soon. This should also benefit the Indian textiles industry, Mehta added.

Of the roughly $16-17 billion of Indian apparel exports, Europe forms 45%, within which UK forms roughly 40%. However, for made-ups, share of Europe in exports comes to roughly around 20-25%, of which UK forms around 15-20%.

Though a small share, UK’s exit from EU should benefit the Indian made-ups industry due to rupee devaluation, said a senior official at Welspun Group on condition of anonymity. Welspun is a leading home textiles or made-ups exporter from India.

The textile industry also hopes Brexit could mean India emerging as a stronger political and trade partner for the UK, thereby expediting work on free trade agreement (FTA).

But according to exporters, now that UK has exited many may follow. In such a scenario, it will take a long time for India to enter into FTA with each country and negotiation is going to be a major challenge.

Of the total, knitwear exports is around Rs 50,150 crore of which Tiurupur’s share is around Rs 23,050 crore or 45.96%. Total knitwear exports to the UK is around Rs 5,519 crore and from Tirupur it is around 30%.