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A mini-project in Managerial Communication
Kirthiga Sekar Kirubanand .K Umamaheswaran .M
(08AA19) (08AA20) (08AA43)
Under the guidance of
Ms. K. Srigayathridevi December 2008- January 2009
PSG INSTITUTE OF MANAGEMENT PSG College of Technology (Autonomous and affiliated to the Anna University) Coimbatore - 641014
We thank the Almighty for giving us strength and courage to complete the project We would like to express our deep sense of gratitude and profound thanks to our respected guide Ms. K. Srigayathridevi, Lecturer, PSG Institute of Management, Coimbatore, for her constant support and valuable suggestions during the course of this work. We wish to express our deepest sense of gratitude and thanks to Mr.Sakthivel, President of Tirupur Exporters Association (TEA), owners of various knitting, dyeing and garmenting companies, for providing us valuable information that was very helpful for completing this project. We also extend our sincere thanks to our beloved parents and most of all, our fellow team-mates, for their constant encouragement, prayers, tolerance, patience, support and advice.
TABLE OF CONTENTS
S.No. 1 Introduction
PAGE NO 1 2 2 4 4 5 5 6 7 10 11 14 17 17 17 18 18 20
1.1 Advantages of Cluster Study 1.2 Tirupur As a Cluster 1.3 Principles of Cluster Approach 1.4 Features of Knitwear Industry 1.5 Opportunities in the Textile Cluster 1.6 Garment Outsourcing 1.7 Industry 1.8 Processes involved in the Industry 1.9 Impact on Economy 1.10 History & Background 1.11 Geography 2 3 Objectives of the Study Methodology 3.1 Research Purpose 3.2 Research Strategy 3.3 Research Approach 4 TEA(Tirupur Exporters Association)
4 Institutional Support 5.4 Community and Local Culture of Cluster 7.1 Cluster Initiatives for Infrastructure Transformation 5. (IL & FS) 5.6 Globalization Factor 7.3 Proactive Role of TEA in Cluster Development 4.2 Networking among Firms in Cluster 7.1 Cluster Development Methodology 4.5 Embeddedness with Locality 7.1 Decline in Garment exports by 10% 7 Findings & Conclusion 7.2 Infrastructure Leasing & Financial Services Ltd.4 5 Dependence on Government for Infrastructure Improvement Role of Government in the Cluster 5.5 Benefits of Cluster Development Programme 6 Analysis & Interpretation 6.2 Cluster focused Approach by TEA 4.3 Leveraging of Funds 5.1 Issues to be addressed based on SWOT 7.3 Human Resources 7.4.7 Environmental Issue 8 Current Issues of Concert 4 21 22 22 24 24 25 25 26 26 27 27 28 33 33 34 34 36 37 37 37 38 .
9 Discussions 9.3 Pollution Problem 9.7 Pending Payment Issues 9.2 Tax Issues 9.1 Reverse effects of Globalization 9.5 Employment Law 9.8 Production Policy 9.9 Single Window Policy 43 46 47 47 47 48 48 48 49 49 50 10 Conclusion 5 .6 Co-ordination among various Government Agencies 9.4 Technology Factor 9.
INTRODUCTION The term ‘cluster’ indicates a sectoral and geographical concentration of enterprises. 85 per cent of the country’s sewing machines and 60 per cent of the nation’s bicycle and bicycle parts. such as cotton knitwear units at Tirupur in Tamil Nadu. sector specific skills etc.3 million and exports worth $60 million per year. Among the larger clusters.000 unregistered small scale units making about 150. It favours the emergence of technical. innovation and collective learning. component and machinery. a city that is well known as the Manchester of India. 6 . Clusters develop in the form of similar enterprises. it is worth mentioning those of: Panipat accounting for 75 per cent of the total blankets produced in the country. What explains and growth of specialized supplier of raw material.1. faced with common challenges and opportunities.000 pairs of shoes per day with a daily production value of $1. clusters account for 77 percent units. 72 per cent employment. Ludhiana. Historical accidents and financial services create a conducive ground for Externalities development of inter-firm cooperation and also cooperation among public and private institutes to promote local production.000 cutters. These clusters have been in existence for decades and sometimes even centuries. According to one estimate. springing up near each other in a “metoo” fashion. and provide employment to more than 20 million people.800 micro-enterprise clusters that contribute significantly to its economy. India has 388 documented industrial clusters. about 3. Surat. which produce and sell a range of related products and are. which is responsible for 80 per cent of the country’s cotton hosiery exports. around 400 handloom clusters. which alone contributes 95 per cent of the country’s woolen knitwear. thus. administrative and services. which cuts and polishes three-quarters of the world’s diamonds in several hundred “factories” employing over 300. 61 percent investment. Tirupur.000 handicraft clusters and 2. 59 per cent output and 76 per cent exports of small scale industries. Agra with 800 registered and 6.
Cluster Approach Identified with Private Sector Driven Model with Govt. generating as much as 80 per cent of knitted garment exports. Growing Recognition of Cluster Contribution. as Facilitator. US and in the Pacific. Tirupur as a Cluster Tirupur. Flavour of the Decade in International Domain. 1. This has helped it to be largely export oriented in terms of over eighty percent of its €1.2. Known as ‘T-Shirt 7 . Advantages of Cluster Study Clusters Provide the Basis for Heterogeneity.1. Our interventions emphasized on cluster wide dissemination on several critical areas as also catalyzing several new pursuits. The Tirupur cluster has grown as a highly linked (although informal) cluster of units which together convert cotton to knitwear products. Over the last two decades. about 4 per cent of India’s total export trade. dyeing. This cluster is widely recognized as a `dynamic’ cluster with necessary `vertical’ depth. Tirupur began to exploit opportunities in the export market. processing. over 5000 units in Tirupur work in the cluster and achieve an aggregate export volume of over USD 1 billion. Tamil Nadu is the Knitwear cluster of India. The growth of the cluster has been propelled by strong associations. As of date. critical mass of enterprises as also appropriate factor conditions. Provide Basis for Designing & Undertaking Holistic Inter-linked Action at the Local Level. Individual units are highly specialized at the manufacturing of fabric.3 billion a year turnover. as a result of collaboration with an Italian cluster. About 45 per cent of India’s garment are in the form of knitwear. in other words. and here the Tamil Nadu centre of Tirupur plays a pivotal role. Tirupur has emerged as a leading export cluster in knitwear and has established its presence in Europe. In the 1970’s.1. knitting and export marketing. Tirupur has traditionally manufactured knitwear and had especially established its name in India in the manufacture of cotton undergarments.
City’, the industry in this town started with the production of low valued cotton hosiery items, mainly under garments during the 1930’s. Knitting to this city was brought by Gulam Kadar in 1937 who established “Baby Knitting Industries” in Kaderpet area of Tirupur. The Tirupur cluster comprises around 5,000 units which are involved in one or the other activities. From being the producers of basic knit garments for lower end of the domestic market, Tirupur knitwear cluster has today a diversified production range comprising Tshirts, polo shirts, sportswear, sweat shirts, ladies dresses, children’s garment, nightwear, etc. Knit Fair Complex, logistics, fashion institute in collaboration with NIFT and the like. Among the important ongoing projects being taken up is an apparel park of 65 units in a 175 acre plot.
Principles of Cluster Approach
1. Demand driven i. Demand creation an integral component ii. Bottom-up approach 2. Targeted at intermediaries i. Not individual firms ii. Institutions, consortia, industry associations 3. Flexible i. Wide variety of themes, actors, ideas as per cluster ii. Dynamic and responsive to changing needs
Features of Knitwear Industry
Low cost labour force, sizeable supply of fabric, raw material and spinning and dyeing facilities.
Existence of many associations for the knitwear cluster well connected with each other
TEA (Tirupur Exporters Association) works together with the Government and local companies to ensure better infrastructure and other facilities for the cluster.
Design oriented production – companies investing in design proposals to clients Formation of NIFT TEA FASHION INSTITUTE – school for apparel design set up to help the exporters
Major exports to European brands : Upim, Diesel, Marlboro, Rinascente, Champion, Liberti, C&A, Wallmart, JC Penny, GAP, Mark & Spencers, Sara Lee,Tomy Hilfiger, Karstadt Quell etc
Tirupur garment exports amount to €1.6 billion international market and €454.5 million in the domestic market.
Opportunities in the Textile Sector
Global Textile and apparel trade is estimated to be €340 billion Indian industry estimated at €35 billion with exports of €12 billion and employs 35 million people
India is the third largest producer of cotton, largest exporter of yarn (25% of world cotton yarn export)
India is a major player in the home textile segment (61% of world loom capacity)
Walmart, Levis, Gap, JC Penny, Marks & Spencer, and other foreign labels are buying more and more garments and fabrics from India.
Walmart alone bought €1.6 million in the year 2005 and it intends to increase this to € 2.3 billion in the next year. European giant GAP is also outsourcing apparel from India.
Singapore based Crocodile International has announced its plans to invest an additional €.39 million.
India is also developing design skills that cover different fabrics and different markets.
The Indian silk industry, which is known for its finery and masterly brocades, are also a great strength to the textile industry.
SMEs (Small/Medium-sized Enterprises’) operating in these clusters derive a clear competitive advantage from: The proximity to sources of raw materials. The availability of suitable business development services. The abundance of customers/buyers attracted by the cluster tradition in that industry. The presence of a skilled labor force.
It has a wide range of factories which export all types of Knits fabrics and supply garments for Kids. Nearly every international knitwear brand in the world has a strong production share from Tirupur. SP . Switcher. Tirupur is also known for its companies which have achieved major certificates and is showing an average growth of 40% per year since 1990. PitStop. Statesman Fashion.UNITED APPARREL. Ladies. PGC Industries-Prem Durai Exports (Prem Groups). Tommy Hilfiger.1. H&M. 11 .S. Diesel. The city grew very quickly due to the high demand for manufacturing for the popular clothing brands mostly in the U. Wal-Mart. But the modern machinery used and the availability of skilled labour. The city is known for its hosiery exports and provides employment for about 300. SCM . ARMY. HTHP. Industry Although Tirupur is a small city compared to Coimbatore. Regency Garments. Whale. Even though the city is very prosperous. it is the centre of Tamil Nadu's cotton knitwear industry and successfully markets its products in India and overseas.both underwear and tops. The lack of infrastructure facilities comparatively for the foreign exchange which the city brings is a big negative point to be noticed. VALUE. Men's garments . FILA. enabled this city to prosper and be competitive internationally. M&S. There are many export Houses in Tirupur successful and fast growing like Eastman Exports . Some of the world's largest retailers including C&A. Reebok. the infrastructure is very minimal.7. A large market for export reject pieces also exists centered in the khaderpet locality close to the railway station.000 people. 100% import many textiles items and clothing from Tirupur. RBR . It is one of the fastest growing city in India in terms of Industry. Stallion Garments. The Tirupur Exporters Association (TEA) and other associations are taking actions directly to get some sort of facilities done (like the third water scheme and NAP). and Europe. RF Garments ( Rite Fit garments). Poppys. It is called the Knits Capital of India as it caters to famous brands and retailers from all over the world.
Fabric Formation o o o o Knitting Crochet Lace Weaving Loom Process Machine processing: fabric formation o o o Knitting Lace Weaving Decoration o o o Dyeing Bleaching Embroidery 12 . 1.8.The association formed by Exporters of Tirupur (TEA) is one of the most successful association in India trying hard and been successful in helping the trade in Tirupur. Processes involved in the Industry Hand processing: yarn formation o o Wool Flax Machine Processing: yarn formation o Cotton Cotton Gin Picking Carding Combining the Slivers Spinning Plying Hand Processing.
dyeing and stitching. 13 . printing and curing. while the minor stages include calendaring (shrinkage control).Garment production is organized in a number of stages: the major stages are knitting.
Job-work and the use of indirect exporters allows for decentralization in the production process and is one reason why there can be large variations in the capital intensity of production (measured by the ratio of the amount of capital that the company owns to its production) in the population of direct exporters. such decentralization has costs of its own. Guarantee Corporation (ECGC). The industry produces knitted garments and is largely focused toward exporting. Indirect exporters are independent garment producers who are entirely responsible for their share of the order. at least for firms that are starting out.e. making this industry quite different from stitched garment production which relies mainly on variable capital. who are specialized producers owning machinery only for a single stage. This is why more capital intensive firms. are considered to have an advantage Tirupur’s success as an industrial cluster nevertheless owes a lot to the presence of these indirect exporters and job-workers: one reason the Outsiders come to Tirupur is because they have access to the indirect exporters and job-workers. it appears that such delays often result in orders being rejected by foreign buyers. delivering the finished product to the direct exporter prior to shipment.) necessary for some stages of production.Most of these stages require some amount of fixed capital. i.S. Quality appears to suffer and delays in shipments. Most firms produce t-shirts. and therefore can go into business without investing in a fully vertically integrated plant. a government agency that insures exporters. but not all of them. and job-workers. From our conversations with bankers in Tirupur and officers in the Export Credit. particularly during the peak production season. targeted at low-end retail outlets in Europe and the U. Once they have an order they often pass on a fraction of the order to one or more indirect exporters. The direct and indirect exporters will typically own the fixed capital (machinery. indirect exporters. etc. For the rest of the stages they will employ jobworkers. firms that do not rely heavily on job-workers and indirect exporters. are more frequent. The fact that Tirupur acts as a market and provides a way in which buyers can find exporters is also presumably important. There are essentially three types of firms in the industry: direct exporters. 14 . Direct exporters are the ones who receive orders from abroad. However.
sufficiency in raw material and spinning capacities. 1. knitwear • Woven and silk besides handmade 15 .1. On the basis of these strengths. third largest producer of cotton and fifth largest producer of synthetic fibres / yarns. It accounts for 21% of India Gross Export Earning. India will become a major outsourcing hub for foreign manufacturers and retailers. Foreign Direct Investments inflows worth €681. Indian Textile exports consist of • Cotton yarn and fabrics. second largest producer of silk and cellulose fibre / yarn. sizable supply of fabric.9. the second highest spindleage in the world after China. It contributes 14% to the Industrial Production and employs about 35 million people.1% to the world Shuttless loomage. with composite mills and large integrated firms being their preferred partners. India’s key assets include a large and low-cost labour force. 12% to the world production of textile fibres and yarns is from India and is the largest producer of Jute.29% of total FDI inflows in the country. accounting for 1. • Made-ups and a variety of garments. Impact on Economy The Indian Textile Industry is growing at 20% and accounts for 4% of India’s GDP.1. • Wool and silk fabrics.59 million have been received by the industry between Aug 91 and May 06. However in High-tech Shuttless Looms this industry’s contribution is only 4. Position of the Indian Textile Industry in the World Textile Economy India contributes 20% to world spindleage capacity. • Man-made yarn and fabrics. It will thus be essential for SMEs to align with these firms that can ensure a market for their products and new orders. It contributes 6% to the world rotorage and 62% to the world loomage.9.
Ramasamy for the first time in Tirupur during Periyar's campaign which is considered to be a great turnover in the Indian political history. Indian Exports Major export destinations for India’s textile and apparel products are the US and EU. is known by various names such as "Dollar City". Analysis of trade figures by the US Census Bureau shows that post-MFA. the world's leading apparel manufacturer and marketer.75 billion in 2007-08. post the termination of the MFA (Multi Fibre Agreement). up from €15 billion expected in the fiscal just ended (2006-07). Exports to the US have further increased since 2005. Tiruppur.2. Annadurai. 1. History & Background Tirupur has carved its name in the Indian history even before her independence. makes 130 million garments annually with a turnover of €1.3 billion (the output mix include about €959. It has come a long way from a small cotton-marketing centre with a few ginning factories to become a prominent cluster of small and medium manufacturing enterprises gainfully engaged in the production and export of a range of knitted apparels. The current turnover of the cluster is about €1. which together account for over 75% of demand. This township started with the production of low valued cotton hosiery items. imports from India into the US have been nearly 27% higher than in the corresponding period in 2004-05.4 million of indirect exports and domestic market sale of about €174. 3 million of direct exports. V. Tiruppur Kumaran. one of the freedom fighters was killed during lathi charge when he was on a patriotic march in Kumaran road without letting down Indian national flag. mainly the under garments during the 1930’s.9.4 million).10.42 billion. €174. Exports from the country will touch €8. Benetton. Kumaran. "Cotton City" and mainly "History Centre". It is popularly known as “Banian City” of the South India is located 60 kms away from Coimbatore city. It still remains as a great inspiration to its people. 16 . situated near Coimbatore which is "The Manchester of South India". "Knit City". former chief minister of Tamilnadu met Periyar E. Tirupur in Tamil Nadu is one of the most successful and vibrant garment clusters in India.1. N. Gulam Kadar in 1937. Another incident is that C. Tirupur's main road is named after its main hero. Knitting to this city was brought by Mr.
the entrepreneurial spirit and heavy competition for the domestic market forced the manufacturers to look beyond national boundaries. In the later years. Till 1960. The first export of knitted garments was made to US and Ghana by Mohan Knits through a Bombay Merchant Exporter in 1972. Mrs Chellammal. the first export 17 . in 1980s a few units made sustained efforts to exports and succeeded. Even though the knitting came to Tirupur during 1920s. in the name of Chellemmal Knitting. Thus. Since then. the cluster produced grey and bleached fabrics for inner wear for the domestic market. In 1974. it has not looked back and the exports during the year 2004 touched a figure of more than Rs. when the first hand operated hosiery was set up.He established “Baby Knitting Industries” in Kaderpet area of Tirupur. Tirupur was the second town in India to start a hosiery unit next to Calcutta.75 crores. In 1987 the exports revenue of Tirupur was Rs. It was followed by the establishment of second knitting unit by a woman. it could not be sustained. progress worth mentioning took place only after 1935. However. 5000 crores contributing almost 80 percent of country’s exports in this sector.
Some of the Mumbai and Delhi based exporters opened their offices at Tirupur to source their knitwear requirements at Tirupur. the number of knitting units reached around 450 in 1960. Started in 1930s as undergarment suppliers to domestic market. 18 . the export touched Rs.10 Crore export during the year 1984. The momentum for export started during early 1990 after the formation of Tirupur Exporters Association (TEA) to address the problems faced by the exporters. The growth of knitting industry in Tirupur can also be attributed to the failure of agriculture crops over a period of time and the availability of yarn. A few people also suggest that the dry climatic conditions in the area also helped the growth of this industry. Before knitting the agricultural labourers were already exposed to the handwoven textiles because of khadi movement started by Mahatma Gandhi.shirts for exports.290 Crore during the year 1990. During 1980.consignment was made with the support from National Small Industries Corporation (NSIC). the basic raw-material for knitting from the nearby mills in Coimbatore. From Rs. That also helped them to get into to the knitting process of textiles. some entrepreneurs started producing T.
77.14 m (988 ft) Population 5.11.25 Time zone IST (UTC+5:30) Area • Elevation • 301.18. Geography Coordinates: 11°11′N 77°15′E11.826 (2005) Codes • Pincode • Telephone • UN/LOCODE • Vehicle • 641 6xx • +91 421 • INMAA • TN-39 and TN42 19 .50.1.
Economy Tirupur is the "Knitwear capital" of India. higher than the national average of 59. 1. In Tiruppur. Now Tirupur had been split in to Tirupur North & Tirupur south constituency.3. and female literacy is 69%. Politics Tiruppur assembly constituency is part of Coimbatore (Lok Sabha constituency). 10% of the population is under 6 years of age. 20 . And the production from Tirupur for domestic needs stood at Rs. An MP constituency also had been created in the name of Tirupur containing parts of Coimbatore. Tirupur has an average literacy rate of 76%.school has the India's second largest number of students studying. naturally communists both CPI & CPI(M) are strong in urban areas ADMK and DMK area also have significant presence. Tirupur Kumaran memorial statue near railway station. 1. Corporation memorial pillar (with Globe on its top).000 Crores achieved by Tirupur in the year ending 2007. As Tirupur is an export hub.1. The school jevabay higher.1. Palani Mp constituency.11.4.14000 Crores. Its economic boom boosts the morale of Indian industrialists. The railway bridge over railway station.1. Tirupur had a population of 346. BJP & Hindu munnani had good base here. Great thing about Tirupur economy is that it is ever growing.5%: male literacy is 82%. It was estimated that the export worth of Rs. the north and the south. Males constitute 52% of the population and females 48%. Demographics As of 2001 India census.11. It is remarkable that it is a school for girls. Landmarks The landmark of Tirupur is the Noyyal river which divides the city into two halves. Town hall. 12. Tirupur contributes to a huge amount of foreign exchange in India. 1.11. Gobi.551.11.2. It has spurred up the textile industry in India for the past three decades.sec.
Erode. Palghat. Deccan Chronicle and Deccan Herald are available in Tirupur. Pollachi.5. Kothagiri and Palani. Salem. Mysore. PN Road. Rameswaram. Dharapuram road. Kumbakonam. Dinamani and Maalaimalar are also available in Tirupur. Kodaikanal. Podi. Bangalore. Mangalam road. Valparai. Hosur. Pollachi Topslip. Tirunelveli. Kollegal. Madurai. Kothagiri. Udumalpet. Valparai. The city has several Local TV Channels. Chennai. Bangalore. The New Indian Express. Mumbai. Vellore. Tirupur is well connected by moffusil bus services to Coimbatore. Dharmapuri. Cumbum. Chennai. Gudalore. The business district is located near the old bus terminal area. New Delhi. Trichy. Coonoor. Sathiamangalam. Kodaikanal. Dinakaran. Tanjore. Mettupalayam. Tiruvarur. Madurai.11. The Hindu. Nagercoil. Ooty. Dinamalar. but it is slowly expanding to the north. Nagercoil. Coonoor.6. Theni. Neliyampathy. Palladam road. English and other regional languages newspapers are available in Tirupur. Rajapalayam. Tiruchur. English dailies such as. Kumbakonam. Palani. Dharapuram. Devakkottai. Media and Communication Leading Tamil. Tirupur also has a railway station and two bus terminals. Tirupathy. Guruvayur and Ernakulam. 1. Karur. Tiruvannamalai. Tirupur is well connected by trains to Coimbatore. Calcutta. Ariyalur. Most of the tourists spots in Kerala And Tamil Nadu are just two to three hours drive from Tirupur viz. Mangalore. Kochi. Tamil dailies such as Thinaththanthi. Tirupur falls under Tamilnadu Telecom circle.1. Uthukuli road. Tiruchendur. Kumaran road is the busiest road in city while Avinashi road. 21 . Ooty. Transport The nearest international airport is the Coimbatore Airport. Chidambaram.11. Kangeyam road. Gobichettipalayam. College road are the arterial roads of the city. Krishnagiri. Virudhunagar. Vellore and Trivandrum.
the lessons often are misapplied Starting with a clear understanding of clusters and the purposes of cluster policy are necessary in order to create the right policies and programs While there is no single “magic bullet.1.1.” there are guidelines that can be used that can help foster business clusters Care must be taken to tailor specific programs and policies to the local context 22 . 3. Issues There is a global search in process for the solution to cluster development While much has been learned. Research Purpose Traditional Economic Development Programmes had failed. medium and large scale industries. Dollar price fluctuations and employee union issues on the various types of industries in the cluster viz. small. marketing and operational details of the companies in the cluster so as to understand the effects of various recessions such as recent power failure. OBJECTIVE OF THE STUDY Our objective is to study the financial. Key goals missing – The competitiveness of business Solution for individual enterprises rather than all No strategy involved Limited outreach No organic relation among programme activities Mostly programmes are supply driven No accountability of fund spent 3.2.1. METHODOLOGY 3.
A system to coordinate the proliferating merchandisers with the suppliers is required in order to minimize their cost of traveling and thus reduce the production cycle. 3. This company had a duly constituted Board of Directors with representation from all stake holder groups. As a result of the infrastructure constraints the Tirupur cluster was unable to move up the value added chain and was unable to expand in terms of its scale of operations 3. a Special Purpose Vehicle (SPV) under the Indian Companies Act was incorporated in the name an style of New Tirupur Area Development Company Limited (NTADCL).3.Partnership (PPP) basis. In essence.3. Improvement in managerial understanding & skills towards ICT understanding Improvement in the availability/ quality of ISVs. Research Strategy The action plan to improve the ICT intervention at the Tirupur cluster follows a three pronged strategy. professional management was inducted in NTADCL to develop and implement each aspect of the project. In addition. As a Public Limited Company the initial share holders of NTADCL were the Tirupur Exporters Association (TEA).2. Problems Faced in the Cluster: Tirupur traditionally suffers from the poor availability of a range of infrastructure services. Research Approach IL&FS undertook the detailed development of the project and recommended an implementation structure based on a Public -Private. these efforts were not materializing in improved infrastructure stock at the pace at which export opportunities were materializing. and Promotion & participation of SMEs in business networks & e-marketplaces. to help them create new designs. 23 . Government of Tamil Nadu (GoTN) and IL&FS.2. While the industry associations representing the clusters have made significant efforts to improve infrastructure. ICT can also facilitate the managers & entrepreneurs in the cluster to establish networking with the various international design institutes & designers.1.
3.Identification of pressure points and intervention • BDS. Business Development Services • Bench marking of Best Practices • Cluster to Cluster learning • An external catalyst ---CDA (Cluster Development Agent) • Monitoring mechanism 24 .i.1.3.e. BDS providers & support institutions • Draw an Exit Strategy and withdraw 3. Implementation method • Understand the value chain with respect to market-diagnosis • Focus the markets (potential) • Install a trained Cluster Development Agent • Build TRUST with cluster actors and among them • Help develop a common Vision & draw an action plan • Develop local private capacities to execute (associations+BDS) • Network SMEs.3. Tools Used • Selection of cluster • Mapping • Diagnostic Study • Action Plan • Vision for the cluster • Value Chain Analysis.2.
Tea offers information about firms involved in manufacture of machinery accessories yarn and threads compacting dyeing. TEA offers lot of value added 20services to its member like technical skill upgradation through NIFT-TEA. formed in the year 1990 with 500 direct members. certifying and scientific agencies computer software and peripherals service providers packing materials dyes and chemicals spinning mills fairs and exhibition promoters fire and safety equipments buying agents pre press printing The achievements of TEA includes establishing a inland container depot India Knit Fair Complex for conducting trade fairs. TEA (Tirupur Exporters Association) Tirupur Exporters Association (TEA) is a dynamic association. Tea public school for fashion institute by signing a MoU with NIFT. fusing embroidery fabric manufacturers and exporters testing. bleaching and garment washing knitting printing. disseminate market information government policy changes through their bulletin and Email. offset. arranging contact with buyers through IUF. Some of the special assignments taken up by them are: Apparel park of 65 units in a 175 acre land Promotion of a common brand to gain differentiation advantage 25 .4. tie and dye.
Sakthivel. TEA collects a service charge for services rendered. the privilege is extended to others subject to the condition that they should become a member of TEA For every project a separate Special Purpose Vehicle (SPV) is formed In the beginning. the participants in the project are free to select their own team for operation and maintenance of the facility. Founder.. preparation of detailed project report. fund raising. Central and State Government nominees are co-opted to the management team wherever they are partners in the project. a separate Secretariat with professionals and required communication facilities is set up and the secretarial functions are transferred to the new secretariat when actual work on the project is commenced. Mr.2. Secretarial services are rendered by TEA Secretariat. Strengthening and widening the road commonly NH-47 & NH-67 for carry transportation and movement of goods. On completion of the project. Cluster Development Methodology TEA is the catalyst All projects are conceived by the ‘think tank’ in TEA based on the needs of industry and demands of members The privilege of participating in any project is first given to members of TEA and only when opportunities are available. President’s approach from the beginning the was development oriented 26 . other office-bearers and members who have specialized management experience are inducted into the management team. Depending upon the size of management team required for every project. Simultaneously. financial tie up etc. Initial spadework. 4. are carried out in the platform of TEA. 4.1. Cluster focused Approach by TEA TEA was formed in 1990 with 20 exporters now 479 Life Members and 156 Associate Members. the President of TEA will be the head of the new SPV.
the inherent strengths was social capital. The fast growth became the breeding ground for a number of problems and exposed the glaring short comings in many areas of industrial growth. easy availability of raw material and flexible specialization helped the industry move up on growth curve. sewerage system with SITP for Tirupur Town and road development Inland Container Depot Industrial Complex and Apparel Park Trade Fair Centre Institute for Supervisory. manpower availability and so on. 4. Proactive Role of TEA in Cluster Development Physical infrastructure-water supply for industrial use. pollution control.000 NIFT-TEA Knitwear Fashion Institute 1997 & 2008 27 . TEA assumed a proactive role and executed a number of projects independently and under Public -Private-Partnership (PPP) concept to address a wide range of issues inhibiting growth and development. TEA Projects TEA Public School-1995 o In a lush green area of 25 acres o Most modern teaching facilities and aids o Each class has 20 students only o Initial investment US$ 500. The leadership had a vision to achieve billion dollar exports in 10 years The focus was on enhancing physical infrastructure Strong desire to demonstrate the power of collective action.3. Managerial and Creative manpower development School Education Quality management systems Skill upgradation in designing In the initial stages of growth. notably deficiencies in infrastructure.
fully air-conditioned built space for Knit Fair Centre built-in display stalls o Two knitwear fairs every year for Summer and winter garments o Two fairs for accessories and machinery o Investment US$ 1 MILLION Apparel Park-2005 o 60 uints.00 lakhs sft. 50.o Having latest machinery. CAD and computer training facilities o Highly qualified faculties o Conducting technical training programmes for management executives o Access for industry to make use of the facilities o ISO 9001 certified o Total project cost US4$ 600.200 crores E‐readiness centre o To disseminate latest ICT knowledge to cluster actors o 4000 sq feet well furnished modern IT training centre with video E conferencing facilities o Place for ISV to meet local companies for ICT needs o Management of Tirupur portal o Investment US$ 250000 28 . testing equipments.15.000 sft.built‐in space of international standards for manufacture of knitwear o Fully self contained infrastructure facilities in 165 acres o Investment in land.77 crores o Investment in machinery Rs.000 Domestic and Industrial water supply o By a SPV-NTADCL o 100 MLD water for domestic use o UG sewerage system for Tirupur town o Project cost us$ 250 million India Centre-1997 o To conduct trade fairs of international standards o In a plot of 7 acres-two floors. building and infrastructure‐Rs.
ROLE OF GOVERNMENT IN THE CLUSTER Investments in the textiles sector can be assessed on the basis of three factors: • Plan schemes such as the Technology Upgradation Funds Scheme (TUFS) Under the TUFS scheme.4. with a total estimated investment of €2. telecom. Phase I of the TADP comprised of the implementation of water supply. There are around 26 Apparel Parks in eight states in India.3 billion • Technology Mission on Cotton • Apparel Parks etc. As a result. Government support has ensured that key policy changes in the fiscal regime have been made in the past two years. which would ensure rapid increase of clothing consumption as well as the fibre consumption. apparel parks. the implementation capacity of para statal agencies were inadequate to implement the kind of large scale infrastructure transmissions at the cluster level. sanitation 29 . women’s working hostels. A single rate will now be prevalent throughout the country. Specialized textile parks. 5. Apparel has the potential of achieving export earnings of €25. logistic management systems etc. The Tirupur Area Development Program (TADP): The TADP comprises of a wide range of infrastructure projects which collectively would significantly increase the competitiveness and export potential of the Tirupur cluster. R&D centers. infrastructure services were below desired levels in terms of quality and reliability. Furthermore. Dependence on Government for Infrastructure Improvements Despite the concerted efforts of the Tirupur Exporters Association to improve the infrastructure in the cluster. These proje cts include roads. Based on a detailed study the key lacunae that was required to be overcome was the availability of good quality and consistent water.4. effluent treatment. effluent treatment. a total of €15. water supply.9 billion has been disbursed for technology upgradation. Accordingly. The apparel parks operate as Special Purpose Vehicle and are run independently by entrepreneurs. A competitive industry. power. EOUs and EPZs have been set up with improved infrastructure. budgetary constraints did not result in any major investments.46 billion by 2010.
Industrial units in the Tirupur cluster agreed to undertake this exercise on a commercial format wherein recovery of all investments would be effected through the levy of user charges. Ministry of Industry. ICICI contributed for NIFT‐TEA Institute. Leveraging Of Funds Central and State Govt. 5. As the first Institution focused on the infrastructure sector. ADB. The Government of Tamil Nadu and the Tirupur Municipality also indicated their willingness to support such an initiative. appr oached IL&FS to develop the Tirupur Area Development Program (TADP).50. 5. are shareholders in NTADCL Ministry of Industry. LIC. GoI has sanctioned Rs.2. Banks. Cluster Initiatives for Infrastructure Transformation Recognising the foregoing the Tirupur Exporters Association (TEA) along with the Tamil Nadu Area Development Corporation (TACID) a wholly owned Company of the Government of Tamil Nadu. Ministry of Textiles contributed for the Trade Fair Centre. SIDBI.3.4. IDBI. 5.00 crores under IIUS. ILFS.1. Institutional Support NIFT-TEA Knitwear Fashion Institute Premier Institute of Apparel Management (PIAM) SIHMA Institute of Fashion Technology 30 . Infrastructure Leasing & Financial Services Limited (IL&FS) IL&FS is an investment banking Institution established by Government of India agencies in 1987 to develop and implement infrastructure projects on a commercial basis and provide a wide array of value added financial services. The other components of TADP were to be implemented as part of Phase II. IL&FS pioneered the concept of commercialization using PublicPrivate-Partnership frameworks and a project development approach. The TADP comprised of a range of infrastructure services to enhance and support the competitiveness of the Tirupur cluster and sustain its export drive.and sewerage system and low cost sanitation. 5.
Organizations which have a national presence like Indian Statistical Institute (ISI). the Textiles Committee use their websites for dissemination of a large portion of information about the organizations and their activities. TEA. ISI and the Textiles Committee have their own websites. Benefits of Cluster Development Programme Reduced Transaction Cost Comparative Advantage Improved Access to Information More Innovations High Rate of Enterprise Development Institutionalization of Success Potential Opportunities for Technology Upgradation Co-opetition Efficiency 31 .5. Website of TEA is linked with the websites of its other members. 5. NIFT-TEA Knitwear Fashion Institute. Apparel Training and Design Institute (ATDC) The Textiles Committee Apparel Export Promotion Council (AEPC) Indian Statistical Institute (ISI) South India Textile Research Institute (SITRA) Sardar Vallabbhai Patel Institute of Textile Management Tirupur Exporters’ Association (TEA) South India Hosiery Manufacturer’s Association (SIHMA) Tirupur Dyers’ Association (TDA) KNITMA ICT linkages among various cluster actors are relatively not very strong. Only TEA uses ICT to communicate with the members.
6. Moreover. We have identified the firms’ dependency on the other cluster companies so as to skeleton the network structure of the cluster. We have got the details on the business ownership of the various firms so as to locate the nature of cluster companies. We have analyzed the personal details of the person-in-charge in a firm for a group of 50 companies in the cluster. We have identified the firms’ year of establishment so as to calculate the average age of the cluster companies. Is there any influence of the family on the firms’ operation? The information regarding the nature of living. Initial investment Current worth of the firm Sales Volume Firms’ Turnover for the past five years The above information helps us to classify the cluster companies into three major groups based on its operations. ANALYSIS AND INTERPRETATION We have analyzed the basic details of a group of 50 companies in the cluster. the progress and the operating environment of the cluster companies are collected. We have identified their nature of their family so as to analyze the family structure of the managers. The above information helps us to analyze in detail the perception and personality traits of the person-in-charge in a firm for a group of 50 companies in the cluster. we have collected the following financial information from the cluster companies. 32 . We have classified them all into 4 age groups so as to study the average age group of the managers of the cluster. cost of living in the cluster. We have classified them all into 3 groups on the basis of educational background so as to study the managerial capability of the managers of the cluster with respect to education.
Decline in Garment exports by 10% During the Financial Year 2007-08. Year 2004-05 2005-06 2006-07 2007-08 Small scale (in lakhs) 34 43. Central Government has also been requested for removal of Fringe Benefit Tax. then the total export loss from Tirupur is 25%. reduction of interest rates and refund of state levies and taxes. Tirupur was usually experiencing 15% growth after abolition of quota and if the decline of 10% in 2007-08 is included.1. 33 .5 6.1 11 19 23. payment of all Service Taxes.crores registered in 2006-07.7 48 Large scale (in crores) 6. the exports from Tirupur has declined by 10% and clocked Rs.950 crores as against Rs.000/. 9.5 55 36 Medium scale (in lakhs) 39 40 43. Large Scale Medium Scale Small Scale The information on the firms’ Turnover for the past four years makes us identify the operating efficiency of the cluster companies. 11.
Turnover of Small scale industries 60 50 Turnover (in lakhs) 40 30 20 10 0 2004-05 2005-06 2006-07 2007-08 Year Small scale (in lakhs) Turnover of Medium scale industries 50 Turnover (in lakhs) 40 30 20 10 0 2004-05 2005-06 2006-07 2007-08 Year Medium scale (in lakhs) The 10% decline in Tirupur Export has happened first time in the history of Tirupur exports since 1985. 34 . Due to this. there will not be any off take in the TUF Scheme for modernization / expansion of the garment units.
The difference between the initial investment and the current worth of the firm in relevance to the operations of the firm gives us the growth of the individual cluster companies.Turnover of Large scale industries 25 20 Turnover (in crores) 15 10 5 0 2004-05 2005-06 2006-07 Year 2007-08 Large scale (in crores) The information on the other investment helps us in making decision about the self-sustaining nature and financial dependency of the cluster companies. The ratio between the sales volume and the turnover gives us the operating price and thus gives us the information on the nature of customers of the cluster companies. We have analyzed the decision making capability and leader perception of the person-incharge in a firm for a group of 50 companies in the cluster. 35 .
00 0.00 20.72 Medium scale (in %) 30 40 10 20 Large scale (in %) 44.56 Small scale Number of industries (in %) 60.00 40.00 30.00 50.67 5.09 54.33 16.00 10.Number of labourers 24 63 Small scale Medium scale Large scale 250 Higher exports Low export orders Stagnant No effect Small scale (in %) 9.44 33.64 22.55 13.00 Small scale (in %) 36 .
FINDINGS & CONCLUSION The overall assessment of Tirupur and its textile industry can be brought through the following SWOT analysis which helps in identifying the issues that are to be addressed in the future.Medium scale Number of industries (in %) 40 35 30 25 20 15 10 5 0 Higher exports Low export orders Stagnant No effect Medium scale large scale Number of industries (in %) 50 40 30 20 10 0 Higher exports Low export orders Stagnant No effect large scale 7. 37 .
1. financial. marketing. management and market environment. Operational costs by way of process improvement/productivity improvement and optimal use of out puts. Organized/institutionalized mechanism/systems for sourcing of raw materials. productivity. Access to avail of institutional credit for technology upgradation and expansion of the units. Awareness about emerging technology. marketing. Information about various Government EXIM policy schemes/non-Governmental financial support schemes. etc.7. 38 . Issues to be addressed based on SWOT Access to market information and emerging market trends Product innovations and diversification Level of design capability Level of skills and knowledge related to quality.
Also. For example. individual sales tours and conducts market survey. As per findings. Cheap source of labor and high potential in workforce brings competitiveness in the cluster. The qualitative finding has been that Tirupur has started with a very small level of units but later it developed its networking. the AEPC sponsors buyer/seller meetings. 7. performance and quality are major elements that affect the development of the cluster and play a big role in improving regional economy performances.3.Local and other organizations play an important role in development of networking base inside the cluster and bring a boom in regional economies performance. networking helps the clusters to move in specific fields. The composite units/firms are 39 . All small units of clusters are equally responsible to create the whole web of cluster. knitwear garments industry.e. Entrepreneurs report that for the past 10 years they have had never faced any severe labor problems or strikes and they have abundant skilled workers and professionals. Also. process of modernization is bringing the chances for more vertical integration among firms. It has been reported that – Tirupur Cluster is still lacking of vertical integration although. labor availability. of firms concentrated in only one industry i. Proactive initiation on environmental related issues Exposure to better work practices and technology in the area of knitting/processing. it collects trade data. uninterrupted power supply. Human resources (HR) Human capital is the backbone of this cluster. organizes trade delegations. A successful joint venture of Switcher brand at Tirupur is a good example of nice networking within cluster.2. at Tirupur cluster. road development and provision for single stop international class manufacturing centre 7. Networking among Firms in Cluster Networking is an important element in all SSI clusters. both locally and internationally. Firms have connected through each other by vertical and horizontal integration. Creation of critical infrastructure such as effluent treatment. The entrepreneurs here reply that there are a large no.. Capacity building for Direct Exports. Tirupur has got prime position in using its human resource capacity as the owners and the workers are committed to their work and they always co-operate with each other.
Skills and training Proper educational and training institutions help the cluster to use its maximum capacity of human resources. its control over the industrial unrest is by nature of the social relations. Also. At Tirupur.Fashion educational institute run by ‘TEA’ (Tirupur Exporters Associations).4. Social and cultural activities and functions always help in developing a bond within this cluster. 7.gradually becoming more organized in executing the works. 7.1. 40 . SIHMA Fashion Institute run by the South India Hosiery Manufacturers Associations are main source of producing efficient workforce for this cluster. Involvement of local communities makes the cluster more successful. NIFT . Community and Local culture of Cluster Social and communities linkage is also found as important elements behind the development ofcluster.3.
Cutting Division Stitching Division Checking Division Ironing Division 41 .
5. Conducive weather. government policy is highly affecting elements in the trend of cluster development in a regional economy. To compete in the global market clusters should be competitive with all elements lying inside the cluster. government policy is central to the eradication of all problems of clusters whether it is infrastructure issues. globalization is highly affecting the elements of development in SSI clusters. the present status of regional economic factors like tax structure affects the embeddness with locality. Also.6. as per findings in the Tirupur cluster case. For example. There is any fundamental measures have been taken to control the polluted environment. Environmental Issue Environment has been important to any cluster development. Globalization Factor Now-a-days. But when we look into detail. and easier availability and quality of work force in the firms involved in Tirupur cluster are possible due to value embeddedness with locality. As mentioned earlier. Where as it seems that entrepreneur not much interested to talk on environment in Tirupur cluster but. Embeddedness with Locality Embeddedness with a locality is a big factor behind development of any cluster. As mentioned in preceding chapters.7. Malaysia. 7. there should be independent agency or government agency to look after the clean and green environment at Tirupur. The discouraging policy of Indian government towards SSI clusters reduces its competitiveness in global market if we compare it to other countries like China. 7. The Indian government support is not up to the mark for the betterment and development of this Industry. the fabric quality and garment sewing workmanship in India is far better than China. Tirupur has progressed rapidly in last decades and now some of firm set up their high quality plants to get better produce of their investment although most of firms using traditional system of production plant that create lot of pollution and waste product. the rise in Tirupur cluster is mainly due to the performance of the firms & availability and quality of labor. The cost of processed knit fabrics is 12 to 18% less in China when compared to India.7. 42 . Singapore and others. it creates excellent bonds between actors inside the cluster. determination and commitment.
transaction cost and are struggling to survive in the competitive global market. the garment exporting units are undergoing severe strain in price front. the exporters are literally not in a position to enjoy the benefit out of it. Moreover. has reduced the said rate for cotton knitted garments from 11% to 8.8% and the value cap has also been reduced for knitted garments to the dismay of Tirupur Exporters Association. we will see more on it in next chapter. Here. Tirupur exporters have alone lost more than Rs. 43 . yarn cost. processing charges. Ministry of Finance while announcing the Duty Drawback Rate for 2008-09. it should be single window policy implemented to make things fast at business environment. CURRENT ISSUES OF CONCERN 'Restoration of duty drawback rates on knitted garments' The Department of Revenue. 100 crores in derivatives deals since the exporters had resorted for derivative deals mainly to offset the losses that may be incurred due to continuous falling of rupee against dollar. power cost. They mentioned that central government of India not taking much attention on them even this cluster has biggest contributor in export of India then early ages.financial problem or sickness in an SSI cluster. Currently. At Tirupur. government officer behave unresponsively with small entrepreneur that shows that lacking of appropriate policy. Added to this. 8. local entrepreneur does not assume that government policy has ever been in their favor. only thing that helps is the spiraling oil prices in the global market. in recent period. The exporters have always looked up to the government whenever any factors affected business performance and the government has always been kind enough to give sops / solutions to bail out the exporters from the crisis after studying the concerned factors. Owing to this. The cost of escalation has happened mainly due to increase in petroleum products. due to increase in input costs like. the currency fluctuations are quite abnormal and also unpredictable. It has been reported that.
the sudden removal of Interest subvention at 4% given on Packing Credit Interest Rates would affect the cost of manufacturing. The Tirupur Exporter's Association has requested the Finance Minister to kindly take into account the various adverse factors gripping on knitwear garment exporting units and restore the duty drawback rate for cotton garments to 11% against 8. 2008 and this effect has come at a time when the banks are revising their Prime Lending Rate (PLR) upwards. As per the earlier circular. Exporters will 44 . in the recent months have compelled knitwear exporters in Tirupur to decide on a 15 percent hike in the prices of the exportable goods. yarn has gone up. increase in processing charges and accessories cost.8%. not to mention product quality. Considering the increase of diesel prices (which includes duties of Customs and Excise also) which resultant into increase of power cost and transaction cost in addition to hike in yarn costs. The cost of power. The inflation is continuing to go up. At this point of time. at least the status quo in the drawback rate at 11% is required for the survival of the knitwear exporting units. the exporters had worked out and given their costing to buyers. Hence they have asked their member units to ask for a price increase to the tune of 15 percent.‘Rupee Export Credit Interest Rates’ Reserve Bank of India has issued a Circular on August 01. With regard to this the Tirupur Exporters Association (TEA) has asked its member units to hold talks with overseas clients in order to reach to a conclusive decision on prices. ‘Price hike’ Uncontrollable hike in prices of power and yarn. The interest rates should be at par with competitive countries to be equally competitive in the price front. informing the closure of the Interest Rate subvention of 4% given on Export Credit with effect from September 30. the interest subvention was given upto March 31st 2009 and based on this circular only.
‘Power supply: Textile manufacturers over TNEB adjudication’ Textile manufacturers here by and large are expressing relief over the adjudication of TamilNadu Electricity Regulatory Commission in the matter of restriction and control of power supply to High Tension (HT) and Low Tension (LT) consumers and surcharge imposed by Tamil Nadu Electricity Board (TNEB) recently. Sakthivel termed the Regulatory Commission’s instructions as a “welcome move”. who had exceeded the ceiling of 80 per cent of their average bi-monthly consumption during the previous year subjected to a maximum ceiling of 2. “Removal of ceiling on energy consumption for LT 45 . Tirupur Exporters Association president A. export units had to go easy with their expansion plans. which authorizes the Board to disconnect power supply only in the event of default in payment of electricity charges. total exports from Tirupur. should be implemented only after obtaining public views. Official sources told The Hindu that the Commission in a sitting on October 24 had pronounced an order nullifying TNEB’s directive to disconnect the service connection of a consumer for violation of the restriction of consumption during peak hours in the evening imposed as part of load shedding. It had been reported that Tirupur exporters lost around Rs14 billion worth of export orders last year due to rupee appreciation. The regulatory body observed that the direction was a violation of Section 56 of the Electricity Act 2003 (Central Act 36 of 2003). With the increase in cost of operation.000 units. They are also optimistic that. up from Rs100 billion of last year.be further relieved even if the revision was around 10 percent because rupee had depreciated recently making the situation a little bearable. may reach around Rs115 billion in the current year. Sources said that the Commission also clarified that the fiat on levy of 50 per cent additional charges on LT industrial and commercial consumers.
The study revealed that the textile industry had been consuming an average of 5. 56 per cent of India's total knitwear exports comes from Tirupur. told The Hindu. a Bangalore-based non-governmental organisation.consumers is imperative for the growth of small and medium scale units functioning in the Tirupur knitwear cluster considering the fiscal and monetary turmoil experienced by the industry in the last few months following the sub-prime crisis in the United States.” ‘Extensive use of firewood’ Extensive use of firewood in the garment cluster of Tirupur without any planned afforestation programmes in place has been causing concern to environmentalists. Knit Cloth Manufacturers Association president Ahill Rathinasamy said: “It is indeed an injustice to levy additional charge from the textile units which were promptly paying the dues at a time when the TNEB has been giving power either free or at concessional rates to some sections of society and multinational companies. washing. Parthiban. ‘US recession hits apparel industry in Tamil Nadu’ Coimbatore's apparel industry is severely hit due to the ongoing recession in US economy and is now receiving only few export orders. programme director (Tirupur region). This would avoid environmental and social problems arising out of uncontrolled deforestation. “The firewood is primarily used for steaming. compacting and printing processes in the sector. stressed the need for finding ways to ensure that available supplies of firewood were used to maximum efficiency in the textile manufacturing chain. 46 . Prakurthi. 95 per cent use firewood as fuel to generate steam. Of the 1. Sakthivel said.250 tonnes of firewood every day.” Mr.100 boilers in Tirupur cluster including the standbys. Tirupur is a major source of foreign exchange earnings for the country because of its exports.” P. A pilot study on consumption of firewood in the garment cluster of Tirupur recently carried out by Prakurthi.
"Tirupur exports apparels worth 14. and Apparel Exports Promotion Council." said Sakthivel. We are definitely expecting a drop of 10-15 per cent in the immediate future. But this year. we expect about five per cent minus growth rate because of the recession in United States so we may do 10. Charirman.500 crores.shirts. The textile and clothing sector is the largest employer after agriculture and accounts for nearly four per cent of India's gross domestic product. 47 . The Apparel Exports Promotion Council is taking various steps to meet the present crisis. Total knitwear export is 16. pique jersey. In knitwear exports. Tirupur Exporters Association.500 crores. president. polo .000 crores. fleece. pointelle jersey. Tirupur is famous for the export of all knitted garment wears such as t-shirts. The orders are already down by 20-25 per cent in terms of quantity. Tirupur has registered a fall of five per cent. about five per cent less. I have the reports. sweat shirts. Stores are coming in. The buyers who are coming in are not buying in as large quantities as they were buying earlier. The present economic crisis in the United States has affected the apparel industry with the apparel exports going down by 15 per cent in Tirupur. polar fleece. banyans. "Well this crisis in US is affecting us a lot." said Rakesh Vaid. pointelle rib and drop needle. rib. pajamas and night dresses on various fabrics like single jersey. interlock.
The first spot of any international buyer for Indian garments is Tirupur." he says. including banians and underwears." says Sakthivel. "Verona began importing woven garments from Tirupur and he introduced more Italian businessmen into trade with Tirupur. Sakthivel says these days there is no competitor to Tirupur in the garments industry in India. 48 ." he says. Tirupur can deliver customised samples in less than 12 hours. to Tirupur. Last year. consumed largely by the domestic market. Tirupur can be our Textile Valley. half a million pieces in a matter of days. There are some 7. "But Tirupur's fortunes took a dramatic turn in the late 1970s when we began exporting our items. Buyers from 35 countries frequently visit Tirupur. It was in the late 1960s that the industry slowly diversified into manufacturing other inner garments.000 crore (Rs 50 billion). DISCUSSIONS If Bangalore can be India's Silicon Valley. Tirupur Exporters Association. garment manufacturers in the town were producing mainly grey and bleached banians (vests)." points out K Palaniraman.000 garment units in the town that provides employment opportunity to close to one million people. Fifty-six per cent of India's total knitwear exports come from Tirupur. Facts on Tirupur's garment industry: Tirupur is one of the largest foreign exchange earning towns in India. the export turnover from the town was more than Rs 5.' According to. The Export Import Policy of 2002-2007 makes laudable tribute to Tirupur for its contribution to the export efforts and calls it a 'Town of Export Excellence. He recalls it all began when some exporters in Mumbai introduced an Italian. a garment manufacturer in India's textiles hot-spot in Tamil Nadu. A Sakthivel.9. "For more than 30 years. Antony Verona. the first hosiery factory with hand-operated machines was set up in Tirupur in 1935. President.
Amidst the prosperity that has befallen this textile town. production of 11 items including non-terry towels and varieties of bed sheets has been reserved exclusively for the handloom sector. which they say has huge export potential. The Save Water Forum Sundaram heads has conducted a study that says the level of Total Dissolved Solids in the groundwater has gone up to 5. Some of them say although quota restrictions have been dismantled. environmental pollution and virtually non-existent sewage systems. The New Tirupur Area Development Corporation Ltd is implementing this project.' that the government has issued. A water supply project to make good quality water available for wet processing has already has taken shape in public-private partnership. There is also the 'Hank Yarn Obligation Order' from the government which stipulates that 40 per cent of the cotton yarn produced by every garment unit in the country has to be in hank form for use by the handloom sector. "The groundwater and soil fertility levels in Tirupur are very low. These include potholed roads. acute shortage of water. 49 .But there is a darker side to Tirupur. The textiles industry has progressed here at the cost of the environment. The water scarcity is so acute in the town that water for dyeing units is fetched in tankers from as far as 20 kilometres by the garment units.000 to 6.000 milligrams per liters. many ills afflict it. domestic textile players continue to be caught in archaic Indian government regulations. A regular garment maker cannot produce and sell these items. Consider this: Under the 'Handloom Reservation Order. But Sakthivel says the water problem is one serious issue that the industry needs to get solved quickly. Environmentalist P K Sundaran says the huge textiles manufacturing is concentrated in a small geographical area in Tirupur that it has exerted extreme pressure on natural resources. The discharge of salts in effluent from the dyeing factories in Tirupur has led to large-scale environmental degradation." Sundaran points out.
which has been ongoing for 18 months. It is one of the most fastest growing city in India in terms of Industry.both underwear and tops. Reebok. Men's garments . Ladies. The city is known for its hosiery exports and provides employment for about 300.UNITED APPARREL. Whale. VALUE. Walmart. it is the centre of Tamil Nadu's cotton knitwear industry and successfully markets its products in India and overseas. According to textile industry estimates." says an exporter. Stallion Garments. The initiative. 50 . an initiative by Microsoft and National Manufacturing Competitiveness Council (NMCC) in partnership with the Tirupur Exporter’s Association (TEA). Switcher. Although Tirupur is a small city compared to Coimbatore. Poppys. H&M. SCM . Some of the world's largest retailers including C&A. A large market for export reject pieces also exists centered in the khaderpet locality close to the railway station. Nearly every international knitwear brand in the world has a strong production share from Tirupur. was rolled out recently. PitStop. Diesel. RF Garments ( Rite Fit garments). PGC Industries-Prem Durai Exports (Prem Groups). It has a wide range of factories which export all types of Knits fabrics and supply garments for Kids."But the real problem that the government does not understand is that there is no market for the hank yarn. 100% import many textiles items and clothing from Tirupur. ARMY. the unsold hank yarn stock currently stands at about 18 million kg. HTHP. Tommy Hilfiger. SP . It is called the Knits Capital of India as it caters to famous brands and retailers from all over the world. aims to enable the units in the cluster enhance their manufacturing competitiveness in the domestic and global market by creating opportunities in market access. Regency Garments. Statesman Fashion.000 people. M&S. There are many export Houses in Tirupur successful and fast growing like Eastman Exports . FILA. establishing knowledge networks and enabling supply chain linkage in the cluster ecosystem. Project Vikas. RBR .
It has been seen that in respect of certain products. Exemption from excise duty and sales tax makes SSI products more competitive in domestic market as well in global market. its products are not very competitive in compare to products from China either in terms of price or quality. Globalization of the economy left much impact on India in this cluster. These economic reform programs fostered the emergence of Indian industry as a global competitor with increase in exports. there should be an appropriate bilateral agreement with Nepal to check it. of SSIs clusters are involved in production of finished products and its marketing. Also. A number of small industries affected or closed or are facing closure because of the inflow of cheap and tax free items from China via Nepal. 51 . The following policy measures can be discussed in this regard. So. international market is packaged with big competitors. Tax issues Sales tax and Excise duty is an important factor for SSIs because large no. the duties of excise and other tax on intermediate goods are higher than on the finished goods. Now-a-days majority of the units are multiplying their production capacity and operation costs are mounting significantly to compete in market. 9. The structure can be improved to enhance the tax relevance. Here. The small enterprise has emerged as a focus area for forging and promoting trade. To improve the competitive strength of the small scale industries clusters will need to be implementing suitable policy measures as a most important element of its development.1. based on interview questions.2.This discussion is broadly based on qualitative findings of elements of regional economies. The finished goods should have higher import duties rather than the raw material. 9. globalization is affecting negatively for this cluster. Reverse effect of Globalization Tirupur has been facing a acute problem in global market. we will consider on some points which have been presented in research findings The process of liberalization started by the Congress government in the year 1991 has created wide opportunities for the development of small-scale industries. So.
52 . Certification should be made compulsory to introduce quality-consciousness among entrepreneurs. Pollution problem Tirupur textile cluster become larger than before in last few decades and its covered areas are still not well satisfactory in aspect of marinating clean and green environment. 9. Government should draw attention to act on this as it’s already suggested by environment research centers of India and abroad.g. there is a lack of availability of appropriate information that induces latest technologies. The technological change in the Tirupur cluster has been quite slow. They need sufficient backup. In addition to change in their organizational systems. Employment Law As found in Tirupur cluster. Technology factor The age of globalization and booming information technology has made all industries highly competitive. there should be a focus on quality standard certification e. especially in promotion of their activities. 9. 1SO 9000. One of the biggest factors responsible for slow technology enhancement is inadequate flow of credit for investment in technological development. This affects the SSI units’ average competitiveness. employment law for employment is not for favorable to them. Maternity Benefits Act and Compensation Act are not easy for entrepreneurs of small scale units to adopt and implement. Delhi. has been providing useful services to the small scale units from many clusters. Testing facilities are also not easily available. There are uncountable reasons responsible for this. it has been found that the existing social security measures such as Employees' Provident Fund. Also. ISO 9001 and ISO 9002. the rate of progress in their performance has not been very impressive. It’s quite old and need to revise. The entire cluster use a lot of chemicals processes to finish its final products. Technology Bureau for International Industrial Partnerships and Technology Bureau for Small Enterprises.3.9. Insurance Act. The entrepreneurs have not made any efforts for modernization because of their domestic type of setup and selling.4.5. Use of chemicals in factory process also produce it’s waste products that’s not well arranged to disposed off and it’s affecting the local quality of water. But. lot of units are still going through phase of modernization although.
Small Industries Service Institutes. SSIs’ Development Commissioner office. Small Industries development Bank of India.8. that deal with small scale industries in India. National Small Industries Corporation. District Industries Centers. for example. State Financial Corporations. the recoverable amount should be charged from them and paid to the concerned SSI. whenever a creditor company goes to file its tax returns. The USA Government policy for protection to indigenous industries can be replicated for Indian SSIs. To check it. Moreover. In order to protect small scale sector from multinational companies a certain percents of items should be purchased by Central and State Government agencies especially when the items are reserved for the SSI sector. State Industrial Development Corporations. State Small Industries Development Corporations etc. 9. there is not any proper program for small scale clusters. there could be adequate safeguards in the tax realization pattern by marinating credit and transactions transparency and by maintaining their records.Also. But. It continues to be a major problem for the Tirupur cluster. But in India. Pending Payment Issues Pending or dues payment by large companies negatively affects the SSIs unit in cluster. 9. 50 items have been de-reserved which were exclusively reserved for the small scale sector. 53 . 9. Regional Testing Centers. there are special laws for the small scale sector23. For example. In USA. Small Industries Development Organization.7. Protection policy Tirupur’s entrepreneur reports that India’s central government policy does not seem to be very protective towards them except of EXIM policy. Ministry of SSI. employees can go in for strike or challenge for judicial process where dates of hearing are fixed months after filing the application due to slow judicial process in India. Co-ordination among various Government Agencies It has been reported in many papers and noticed at small clusters and also in eminent cluster like Tirupur textile cluster about complexity about function of Government agencies.6. in all of them there a lot of cases are due to lack of clearance by them as many units do not fulfill their criteria.
9. it can be suggested to there should be options of Limited Partnership as it has in United Kingdom. Tirupur and other similar clusters now become an eminent cluster and exporting products contributor and source of foreign currency earner.9. But. Limited Company and Private Limited Company. 54 . it is seen that the partnership issues are most problematic. Single window policy Due to not being up dated of certain policy and traditional system of working make slow the all business environment of nearby. Here. There are complex business legal processes that make slow business activity in this area and distract the foreign investor as well. in Tirupur there isn’t any single window policy24 implemented yet as well as it seen in EPZ (now named as SEZ) in Indian region. Proprietorship. As for example: inappropriate partnership act. So. in which there are four ways to set up a company in India: Partnership.
designing. 55 . merchandising and customer relations. CONCLUSION Overall. Human resources in the industry are to be trained. such quality monitoring and control can only be expected. It appears that there are huge gaps in the deployment of ICT technology in the areas of supply chain management. The most common handicap mentioned in ICT implementation was delay in installing the systems due to limited availability of the local software vendors which are mostly based at Coimbatore. Huge amount of money is being spent only for monitoring the quality standards. e-commerce etc. The cluster appeared more conscious of spending on ICT in monitoring the quality standards. Study found limited ICT "vision" for an integrated business and there was limited knowledge on latest technologies such as data warehousing. While large firms in the cluster are inline with the leading international manufacturing sectors in ICT usage. In a nutshell Tirupur exporters do not require be educated about the benefits of ICT. as the exporters’ source supplies from multi-level production centers & varied production sources. They are trying addressing the issues internally with available sources with them and the small service providers. merchandising and customer relations. which is affordable and applicable. Demonstration of the system. designing. Chennai or Bangalore. have not been developed. Since most of the exporters have multilevel production centers and varied production sources. most of MSMEs requires strong support. the survey concluded huge gaps in the deployment of Information & Communication Technology (ICT) in the areas of supply chain management. So far no concrete platform to address the issues relating to the industry and are affordable to the SMEs. Application and its benefits are to be demonstrated through model units and by extending handholding during the initial period of demonstration and application. which requires quality synchronization for standardized exports.10. has to be made.
QUESTIONNAIRE INTERVAL QUESTIONS: Age o o o o 21 – 30 31 – 40 41 – 50 51 and above NOMINAL QUESTIONS: Company Established Year Educational Qualification of Person-in-charge : : What do feel about the standard and cost of living in the cluster? Marketing Details: What are the modes of communication used with the customers? o o o Websites / e-mail Telephone Only through Buying Offices How do you identify and reach the target market? o o o o Through buying office Direct contact with clients/customers As an allied work Others (Please specify) _________________ Where did you get the Supply of raw materials? o o o Only from Tamil Nadu From other states Imported from foreign countries How do you perceive the other companies in the cluster as? o Competitive 56 .
of pieces/kgs) in Can you give us the turnover for the past 5 years? : : : : Is there a dependency on other cluster (Tirupur) companies? o o For Core Operation For Allied Operation What do you feel about the progress of your company? o o o o Booming Steady growth Declining Stagnant Operational Details: Total number of employees in your company .o o o Supportive Dependant (Income Sources) Others (Please specify) _________________ Mode of transport that you use for o o Local Supply Export : _________________ : _________________ Financial Details: Your Initial Investment Current Worth of your firm Your Sales Volume (No. of employee levels (Hierarchy/Different posts) in company : What type of people you recruit (Recruitment preference)? o o o o Skilled Labor Young /Unskilled Labor Contract Labor Graduates 57 : .Initially Currently : : No.
How will you decide on the salary structure in your company? o o o o Skill Experience Work/Output Others (Please specify) _________________ : What are the measures that you undertake for Employee benefits and care? o o o o ESI/PF Mediclaim/Insurance Food/Accommodation Others (Please specify) _________________ What are the opportunities for Employee Growth (Individual Development)? o o o o Promotions Internal Training Social Awareness/Development Programs Others (Please specify) _________________ Recent Scenario: What effects do you have with increase in $ price (From $38 to $48)? o o o o Higher profits Lower Export orders Stagnant Goods Other Effects What are the effects of the current financial recession? o o o o Profit (Please specify on scale of 1-5) Loss (Please specify on scale of 1-5) Break-Even Other effects (Please Specify) : _________________ What are the effects of the recent power failures? Counter Measures that you applied against during recession period? o o o o Layoff Downsizing Salary reduction Other measures 58 .
_________________ What are the aids that you get from the Govt? o o o Aids being received so far Aids expected during recession Aids provided during recession : : : What are the actions that you have taken for the betterment of society (CSR)? 59 . _________________ ii.Are there any pollution caused to the environment by your company? o If Yes (Please Specify the countermeasures applied) i.
com/2008/10/06/stories/2008100654990600.hindu.aspx?news_id=64437 http://www. 12.tea-india. 4. 22.htm http://www.tirupurchamber. 13. 5. 24. 7.htm http://www.com/2008/10/26/stories/2008102659600700.hindu.com/ http://www. 16.com/ http://www.com/2008/11/17/stories/2008111757200300.org/urban/led/cluster2. 25.htm http://www.nic.mobi/ http://www.teonline.com/2008/11/14/stories/2008111460780300.edu/econ-clusters.htm http://www.hbs.com/2008/11/15/stories/2008111556281500.hindu.int/comm/enterprise/entrepreneurship/support_measures/cluster/ http://www. 23. http://www.net/ http://www. 2.tn.thehindubusinessline.apparelworld.com/2008/11/06/stories/2008110658740500. 19. 6.htm http://economictimes. 8.com/bline/2005/01/11/stories/2005011101711700.gov.theknitwear.hindu.com/News/News_By_Industry/Cons_Products/US_recessi on_hits_apparel_industry_in_Tamil_Nadu/articleshow/3611536.com/ www.chennaionline.BIBLIOGRAPHY/REFERENCES 1.com/newsitem.in/ssischeme.in/spc/annualplan/ http://www.com/ http://www.org/ http://www.isc. 10.hindu.gov/Research/ClusterBased.com/2008/11/05/stories/2008110550842100.com/2008/10/16/stories/2008101652830500. 17. 14.htm http://www.hindu.tirupur.htm http://www. 21.htm http://www.htm http://www.com/news/apparel-news/newsdetails.eu.worldbank.tirupur. 20.hindu. 3.thehindubusinessline.eda. 9.org/ http://www.com/2008/11/04/stories/2008110452870100.xml http://www. 27.fibre2fashion.html http://europa.htm http://ssi.aspx?NEWSID=d0268539-fb04-4778-aec1549f78569056&CATEGORYNAME=CHN http://www. 18.htm 60 .cms http://news. 26.indiatimes.hindu. 11.tirupurjobs. 15.htm http://www.
In blended yarns. Calendering .The technique of permanently joining together two fabrics or layers of fabrics together by a bonding agent into one package. stain removal. Absorbency is a very important property. Blend . the wind resistance of sailcloth. binders. chafing. and other frictional actions. or inhibiting the growth of micro-organisms.The ability of a fabric to take in moisture. and moisture. The materials may be treated with chemicals or exposed to sun. glazing. air. Buttons . 61 .The degree by which a fabric is able to withstand loss of appearance through surface wear. Special adhesives. embossing. and wrinkle recovery. Bleaching . static build-up. which affects many other characteristics such as skin comfort.A process of whitening fibers.Specified by design. The bonding of fibers in a single layer of material is called a web. two or more different types of staple fibers are twisted or spun together to form the yarn. the air resistance of parachute cloth. and moiré are produced. or pearl.A term applied to a yarn or a fabric that is made up of more than one fiber. Air Permeability . An example of a typical blended yarn or fabric is polyester/cotton. making the finished fiber or fabric resistant to.The porosity of a fabric as estimated by the ease with which air passes through it. etc. melamine. yarns. buttons are either shanked (attached by passing threads through the shank's eye) or holed (attached by passing threads through the button's holes).A process for finishing fabrics in which such special effects as high luster.APPENDIX Abrasion Resistance . or thin slices of foam may be used as the marrying agent. color. shrinkage. or fabrics by removing the natural and artificial impurities to obtain clear whites for finished fabric. water repellency. size. rubbing. Anti-Bacterial (Anti-Microbial) . as measured on standard testing equipment. Absorbency . and type---such as brass. Bonding . Air permeability measures the warmth of blankets.A fabric that has been chemically treated or a fiber that is created by incorporating the anti-bacterial chemical agent into the fiber formula. or in preparation for dyeing and finishing.
A unicellular. longer than 1 1/2 inch. including the Pima and Egyptian varieties.A fabric knitted on a circular knitting machine using interlocking loops and a double stitch on a double needle frame to form a fabric with double thickness. Finishes used on fabrics that make them resistant to wrinkling and creasing. Fibers are typically 1/2 inch to 2 inches long. one color predominates on the fabric surface. applying heat under carefully controlled conditions to a fabric or the garment.True denim is twill weave cotton-like fabric made with different colored yarns in the warp and the weft. or has stretch engineered into a yarn through mechanical stretch construction. water repellency. 62 . Denim . Curing .A baking process with the use of resin finishes.Also referred to as CRF. Collar . such as synthetic resin type finishes like durable press. Crease-retention. wrinkle resistance. which cause a reaction in the finishing agents and make them work. Crease Retention . Comfort Stretch . Crease Resistant Finish . Double Knit . Today some fabrics are made highly resistant to wrinkling through fiber blending and construction.Cleaning .The term given to the freedom of movement experienced in the wearing of a garment that contains spandex.The ability of a cloth to hold or pleat or a crease. The longest staple fibers.Hand operation in which the basting threads are removed from the garment. Due to the twill construction. Cotton . and durable press are examples of finishes that are cured.Two or more thicknesses of fabric attached to the neckhole opening to provide a firm and neat-appearing finish. through the use of a heat treatment. produce the highest quality cotton fabrics. Heat setting of thermoplastic fibers causes creases to be permanently set. It is the same on both sides. usually done prior to the final pressing. which has been intentionally created. natural fiber that grows in the seed pod of the cotton plant.
the lining is made of a smooth lustrous fabric. Durability . These processes include bleaching. heat setting. Knit Fabric . or size immediately after the removal of stress. Elasticity . shape.Double Weave .An insulation.The ability of a fabric to resist wear through continual use.A woven fabric construction made by interlacing two or more sets of warp yarns with two or more sets of filling yarns. Embroidery . The interlining is used primarily to provide warmth in coats. or stiffening fabric. and is ready to be used in the manufacturing of garments.A fabric that is used to cover the inside of a garment to provide a finished look.A process in which the fibers of a fabric are coated with a filmy substance to create certain high performance qualities. 63 . Ergonomics .An embellishment of a fabric or garment in which colored threads are sewn on to the fabric to create a design. Encapsulation .The ability of a fiber or fabric to return to its original length. Embroidery may be done either by hand or machine. and outerwear. The most common double weave fabrics are made using a total of either four or five sets of yarns. dyeing. Interlining . Lining . Knit fabrics are held together by looping the yarns around each other. such as breathability.The study of improving a garment design by enhancing the wearers' comfort. padding. either sewn to the wrong side of the lining or the inner side of the outer shell fabric. Finished Fabric . jackets. printing. Wales are the ridges that run lengthwise in the fabric. Dye (Piece) .A fabric that has gone through all the necessary finishing processes. etc.Fabrics made from only one set of yarns. Some knits have their yarns running along the length of the fabric. all running in the same direction.Dyeing of the fabric into solid colors after weaving or knitting. while others have their yarns running across the width of the fabric. performance. or health. Generally. Knitting creates ridges in the resulting fabric. courses run crosswise.
stretch to the yarn. Zippers used in industrial clothing are metal or brass. Wash-and-Wear .Micro-encapsulation .The physical parts of the zipper are: scoop teeth. spindle. twisting. skirts.A tangled ball of fibers that appears on the surface of a fabric. Also referred to as "Easy Care.The process of forming a fabric on a loom by interlacing the warp (lengthwise yarns) and the filling (crosswise yarns) perpendicular to each other.A method of enclosing polymer additive materials in microscopic capsules. cheese. to provide an acceptable hand in the woven gray goods. Texturizing . Plastic zippers are used typical apparel garments. Zippers are used as a closure in pants. as a result of wear or continued friction or rubbing on the surface of the fabric. lock. and dresses. Zipper .A continuous strand of textile fibers created when a cluster of individual fibers are twisted together. Sizing . chain. Yarn . These long yarns are used to create fabrics. Pill . either by knitting or weaving. 64 .The application of a size mixture to warp yarn.This final operation in the production of natural yarn consists of the drawing. and therefore creates new aesthetics to the finished fabric." Weaving . The purpose of this is to make the yarn smoother and stronger to withstand the strain of weaving. pull tape. and to increase fabric weight. tube.Ability of a garment to be washed by hand or in a washing machine and require little or no ironing. Spinning . which can then be released under certain conditions to enhance performance properties. etc.A process performed on specialized machinery which create bulk. and slider. cop. and the winding of the newly spun yarn onto a device such as a bobbin.
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