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Industry Talk

Tamil Nadu spinners invest to move up value chain

At least 25 mills have ventured this way, either by installing knitting machines or going further toward complete garments, The Economic Times reports.

4th November 2015

Knitting Industry
 |  Chennai

Knitwear, Knitted Outerwear

At least 25 mills have ventured this way, either by installing knitting machines or going further toward complete garments, coinciding with the Department of Commerce's export sop proposed last week, the newspaper reports.

Introduction of new products

The export push included introduction of new products and export target nations to its list of items eligible for support in a move to prop up shipments after a steady decline in exports led to speculation of exports falling behind the previous year's numbers.

Textile items, such as fabrics and synthetic textiles, which are facing a Chinese import onslaught in India, were included in the export incentive list that includes pharmaceutical, auto components, telecommunications and transport equipment among others.

Reverse expansion

"In Tamil Nadu, the big garment makers are into reverse expansion to set up their own yarn units but the reverse is not happening much because there is a risk of holding inventory without knowing there is a buyer," said Srihari Balakrishnan, of MD of denims maker KG Fabriks, in an interview with The Economic Times.

“This central government incentive has brightened possibilities of forward integration,” Srihari Balakrishnan added. KG Fabriks had expanded into fabrics and garments nearly a decade ago and is doing well, the newspaper reports.

Expenditure

In terms of expenditure for a textile unit that wants to diversify, a knitting machine from Taiwan costs around EUR 21,089 while a European import will cost around EUR 35,149.

With additional costs put into labour, power, marketing and so on, a bid to move up for an average textile mills will cost more than EUR 400 thousand.

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