In a garment hub in south India, R.Okay. Sivasubramaniam is fielding requests from Walmart and Costco who wish to sidestep increased US tariffs confronted by rival Asian suppliers, Bangladesh and China. However rows of idle stitching traces at his manufacturing unit lay naked his greatest problem.
“Even when orders come, we want labour. We don’t have enough labour,” mentioned the managing director of Raft Clothes which provides underwear and t-shirts priced as little as $1 to US manufacturers.
Thought-about India’s knitwear capital, Tiruppur metropolis within the southern state of Tamil Nadu accounts for almost one-third of the nation’s $16 billion in attire exports, and is looking at an enormous alternative as US consumers discover ramping up sourcing from India within the face of heftier tariffs on different Asian hubs.
US President Donald Trump plans to hit India, the world’s sixth largest textile and attire exporter, with a 26 % tariff from July, beneath the 37 % imposed on Bangladesh, 46 % on Vietnam and 145 % on China – all of that are greater American suppliers.
These tariffs will make attire from India way more aggressive with each Bangladesh and China.
However the temper is somber on the Tiruppur textile park because it faces a actuality verify: India’s hopes of capitalising on its tariff benefit are hindered by a talented labour crunch, restricted economies of scale, and excessive prices.
Raft Clothes desires to develop manufacturing to sort out new orders however is importing high-end machines to automate some stitching processes, given the enterprise for now closely is dependent upon migrant labour, which could be very robust to search out or retain.
Garment exporters in India say staff need to be educated and lots of depart inside months to work at smaller, unorganised models that permit longer hours and pay extra. The bigger producers can’t match them as a result of international shoppers’ necessities on price and staff’ situations, in keeping with Reuters interviews with 10 producers and attire exporter commerce teams representing 9,000 companies.
Prime Minister Narendra Modi has for years courted international buyers to his “Make in India” programme to show the South Asian nation into a world manufacturing hub. A scarcity of expert staff in a nation the place 90 % of the labour drive operates within the casual sector is seen as an enormous roadblock, particularly in labour-intensive sectors like clothes.
Tiruppur gives a glimpse of India’s labour pressure.
“We’d like at the very least 100,000 staff,” mentioned Kumar Duraiswamy of the exporters affiliation in Tiruppur, the place he mentioned greater than 1 million individuals at the moment work.
Modi’s authorities final 12 months mentioned it was extending a programme to particularly prepare 300,000 individuals in textile-related expertise, together with garment making.
Within the textile hub, some have taken issues into their very own arms.
Amid a hum of stitching machines on the Cotton Blossom manufacturing unit, which makes 1.2 million clothes a month, together with for American sporting items retailer Bass Professional Outlets, Naveen Micheal John mentioned he has arrange three centres hundreds of miles away to coach and supply migrant staff.
And even then, most return to their dwelling cities after just a few months.
“We ability them there for 3 months, then they’re right here for seven months. Then they return again,” John mentioned throughout a tour of his garment unit, including he desires to have a look at different states the place labour and authorities incentives each could also be higher.
Capability Woes
China’s $16.5 billion price of attire exports, Vietnam’s $14.9 billion and Bangladesh’s $7.3 billion made them the three greatest suppliers to America in 2024, when India shipped items price $4.7 billion, in keeping with US authorities information.
US firms have for years been diversifying their provide chains past China amid geopolitical tensions. And even earlier than the information of tariffs in April, now paused till July, Bangladesh’s garment trade started dropping its sheen amid political turmoil there.
A survey of 30 main US attire manufacturers by the US Style Business Affiliation confirmed India had emerged as the most well-liked sourcing hub in 2024, with almost 60 % of respondents planning to develop sourcing from there.
With the tariffs, India’s exports would price $4.31 per sq. metre of attire, in contrast with $4.24 for Bangladesh and $4.35 for China, a pointy enchancment on India’s competitiveness with out the levies, in keeping with Reuters calculations primarily based on 2024 import information from the US Workplace of Textiles and Attire.
But it surely’s within the economies of scale the place India loses.
Bangladesh Garment Producers and Exporters Affiliation says a mean garment manufacturing unit there has at the very least 1,200 staff, whereas in India, in keeping with its Attire Export Promotion Council, there are solely 600 to 800.
“Bangladesh capacities are big … We’ve problems with capability constraint, lack of financial system of scale as a result of smaller measurement of factories, labour unavailability throughout peak seasons,” mentioned Mithileshwar Thakur of the Indian commerce group.
To handle these challenges, garment makers have began to arrange factories in states the place migrant staff come from, he mentioned.
In Tiruppur, its exports affiliation says the biggest 100 exporters contributed 50 % of its $5 billion gross sales final fiscal 12 months, with the remainder from 2,400 models, a telling signal of the fragmented and largely smaller-scale operations.
Raft makes 12 million garment items a 12 months with a workforce of simply 250 individuals. A US shopper is near putting an order for 3 million models, which can stretch the manufacturing unit to its restrict and drive it to think about growth.
“This one order is greater than sufficient for us,” mentioned Sivasubramaniam.
Pricing Roadblock
Information from transport consultants Ocean Audit confirmed Walmart imported 1,100 containers of family items and clothes between April 2 and Might 4 from India, almost double the identical interval final 12 months, together with cotton shirts and pleated maxi skirts.
In a press release, Walmart mentioned it sources from greater than 70 international locations all over the world because it goals to search out the correct mix of suppliers and merchandise.
Whereas US retailers are lodging extra queries in Tiruppur, pricing negotiations stay contentious as a result of increased labour and different prices.
Indian brokerage Avendus Spark mentioned in March Bangladesh’s price of labour stood at $139 per thirty days, in comparison with India’s $180 and China’s $514.
P. Senthilkumar, a senior associate at India’s Vector Consulting Group, mentioned India had stricter guidelines for extra time insurance policies and employee shifts, additional elevating prices.
In Dhaka, Anwar-ul-Alam Chowdhury of Evince Group mentioned most of their US consumers have been sticking with Bangladesh, given the “giant manufacturing capability, decrease prices, and dependable high quality give us a transparent edge.”
In India, although, Tiruppur exporters mentioned they’re in hectic talks with many US shoppers who love the Bangladesh price benefit and are aggressively bargaining.
At Walmart-supplier Balu Exports, Mahesh Kumar Jegadeesan mentioned US shoppers had conveyed “we is not going to budge on the value” and have been keen to maneuver some orders provided that Indian exporters can match costs.
Contained in the close by Raft Clothes manufacturing unit, the place ladies have been stitching underwear, the smile on managing director Sivasubramaniam’s face sparked by 14 new enterprise inquiries of latest weeks pale shortly.
“All need us to match Bangladesh costs. Value is an enormous drawback,” he mentioned.
Reporting by Dhwani Pandya, Praveen Paramasivam, Manoj Kumar and Ruma Paul; Further reporting by Siddharth Cavale in New York; Modifying by Aditya Kalra and Sonali Paul
