Sri Lankan crisis could benefit Indian apparel business but need for improved cotton trade conditions: TEA

By

Isabelle Crossley

Published
Apr 12, 2022

The ongoing economic crisis in Sri Lanka could benefit the Indian apparel industry to a small degree but the Tiruppur Exporters Association is lobbying for the removal of import duty on cotton which it sees as the real key to growth. 

The TEA maintains that high cotton and yarn prices in India will prevent garment businesses in the country from benefitting from the effects of Sri Lanka’s economic crisis in terms of receiving extra orders, ET Bureau reported. The association has urged the government to reduce import duty on cotton to enable garment manufacturers to increase competitiveness in the global market where they face fierce competition. 
 
“There may not be a major inflow of orders for units in Tiruppur owing to high cotton and yarn prices,” TEA president Raja A Shanmugham told Indo-Asian News Service. “The international brands may shift their sourcing to countries like Bangladesh and Vietnam.”  

Shanmugham also said that numerous Sri Lankan garment businesses have manufacturing units in India of their own enabling them to execute orders without relying on Indian businesses. India’s import duty on cotton is currently at 11% and this has led businesses to increase prices which has in turn made manufacturing more expensive. 
 
The economic crisis in Sri Lanka has resulted in power cuts which has made manufacturing more challenging.

Tamil Nadu Chief Minister M K Stalin reported that a small number of Sri Lankans have arrived in the state as they found living conditions in Sri Lanka unbearable. Stalin has asked Prime Minister Narendra Modi to give the Tamil Nadu government authority to provide Sri Lankan Tamils with essential goods during this time.