இந்த கட்டுரையின் விளம்பரதார்
U. Bharath (cbnews@imaws.org)
The restaurant sector in Tiruppur district, in Tamil Nadu, has been reeling under the economic fallout of the 50% import tariff imposed by the USA on India. The textile and knitwear export industry is one of the most affected due to the punitive trade tariff, and an important textile cluster like Tiruppur is directly affected by the economic slowdown caused by the new tariff regime, which came into effect in August.
According to restaurateurs, loss of business to the tune of 20% to 40% in the restaurant sector has been reported in the district, and patronage suffered in the second quarter of the fiscal year. Tiruppur district, with over 10,000 hosiery and knitwear units, including export units, is called the ‘knitwear capital of India’, and the industry is a labor-intensive one employing over 10 lakh laborers, including over 3 lakh migrant laborers from various parts of the North Indian states.
Over 20% to 40% business loss due to the slowdown
According to S. Nagarajan, Secretary of Tiruppur District Hoteliers Association (TDHA), over 10,000 hotels function in Tiruppur, Avinashi, Palladam and Uthukuldi, which are major textile clusters in the district. Since the steep tariff hike came into effect, affecting export orders to the USA, the manufacturing has been stalled, resulting in job losses caused by reduced orders and stalled operations of thousands of knit-wear, dyeing and subcontract units in the district.
“Thousands of migrant workers have recently returned to their hometowns, as knitwear units are either shut or face reduced operations. The droves of such workers who left for their hometowns during Diwali holidays have not returned yet, as the knitwear units are struggling a lot,” he said.
Overall in India, the knitwear industry has suffered a 39% decline since the punitive import tariff imposed by the USA came into effect a couple of months back. The restaurant sector is one of the main sectors, which took a hit due to the sudden loss of patronage. The reduction in footfalls in the restaurants and bakeries in cities and towns like Tiruppur, Avinashi, Palladam and Uthukuli, which are major textile clusters, is already evident.
Reduced cash flow?
Citing reduced cash flow among the general public and workers, the restauranteurs say restaurants in Union Mill Road, the bus stand area, and Kangeyam Road took the severe hit in recent months.
Nearly 50% labour force have left their jobs due to the stalled operations of knitwear units, say the restaureurs in Tiruppur town. While there is reduced cash flow among the remaining labour force, allied industries such as dyeing units and job work units have also suffered losses and are staring at a crisis. With the departure of thousands of labourers restaurants and bakeries continue to suffer poor patronage in the recent months.
Ramar, Treasurer, of Tiruppur District Hoteliers Association, pointed out that the USA, which accounts for a major slice of over 50% of the export market for Tiruppur products has affected the business prospects in a big way.
Due to this, Tiruppur cotton knit-wear products has become dearer for the USA import businesses, which are turning to other countries such as Bangladesh and Vietnam for imports which enjoy a much lower tariff of 15%. According to experts the slowdown of the textile industry is a great economic blow to Tiruppur, along with other cities such as Noida and Surat, which are known for apparel and synthetic fabric respectively.
The steep 50% import tariff is globally the highest, and the export businesses like in Tiruppur are struggling to deal with it. Tiruppur holds a pride of place in the cotton knitwear industry in the country with exports to the tune of Rs. 40,000 crores during 2024-25 fiscal.
Textile and knitwear industry is one of the most affected industries due to the US new import tariff along with other major industries including gem and jewellery, leather and pharmaceutical industries.
Reduced footfall
Swaminathan, President of TDHA, says that reduced footfall in restaurants and bakeries has become the norm of the day since the US import tariff came into effect a couple of months back.
“Restaurants do brisk business only during weekends, and we did well during the Diwali holidays. But our business prospects during weekdays have been highly affected, as there are no patrons to come dine in restaurants, and much of the labour force living in Tiruppur and other towns has left for Diwali and never returned. During normal days, supervisors and workers in various knitwear units, including hosiery, dyeing and sub-contract units, come to dine in restaurants. Due to stalled operations, the cash flow is very low and with empty pockets they naturally avoid eating out,” Swaminathan says.
According to the Non-Vegetarian restaurant owners, the loss of revenue has been much more pronounced in NV outlets more than it does in vegetarian outlets.
“If two people want to dine in an NV restaurant, they may have to shell out at least Rs. 2,000. But due to the slowdown of the knit-wear business, the workers have stopped NV outlets since September,” say NV restaurant owners in the district.
According to hoteliers in the district, they are looking up to the Government to redeem the ailing knit-wear sector in Tiruppur district, by announcing concessions for the sector to help the industry to regain its footing from the pitfalls suffered due to the US import tax regime. The restaurant sector in the district, which is an important service sector, is waiting with its fingers crossed that the Indian Government will redeem the ailing textile sector by announcing new concessions and by exploring new export market avenues like Russia and Arab countries for Tiruppur knit-wear products.
According to the restaurateurs, the fullest impact of the US import tariff is yet to be felt by businesses as only two months have passed. “We don’t know what it would be like in the coming days” they wonder. They feel that they are looking forward to the USA rolling back the punitive tariff, as done in the case of China. They also believe that the Indian Government, on its part, will come out with measures, like the extension of the Remission of Duties and Taxes on Exported Products (RoDTEP), which was carried out recently to bolster up the textile industry, facing a crisis.
“We are hoping against hope that the knitwear sector bounces back to its glory, so that affected service sectors like the restaurant and bakery businesses could foresee a bright future in a textile town like Tiruppur” say the affected restauranteurs in Tiruppur.
