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G. Gurumurthy

Knitted fabric bundles stacked in a `seconds' godown. These shops sell in retail the factory rejects of dyed knitted fabrics to `seconds' garment units.

COIMBATORE, July 7

THE fortunes of `seconds' hosiery garment producers who make use of the rejected or cut fabrics and export surpluses from knitwear export houses in Tirupur to produce second quality garments have hit a bad patch.

At least two external factors of recent origin have led to the stalemate in the Rs 400-crore `seconds' hosiery trade in Tirupur.

First the communal flare-up in Gurajat early this year dealt a blow to the `seconds' hosiery goods as most small-time garment traders from Ahmedabad, who regularly indent their supplies from Tirupur, stopped making purchases for sometime now. With the fear psychosis still haunting the local garment trade in Ahmedabad which used to contribute to about 30 per cent of Tirupur's `seconds' garment trade, the buyers from Gujarat are still refraining from directly buying from Tirupur, the hosiery traders say.

Even as the trade was trying to come to terms with the decline in the Gujarat sale, the vigorous enforcement of the amended Central Sales Tax (CST) provision effected from April last, demanding inter-State transaction of all non-scheduled goods including the hosiery to be done through `C' form route and makes sales tax registration mandatory for the trade has come as rude shock to the `seconds' garment trade.

`More than 80 per cent of the 2,000-odd tiny garmenting units involved in converting factory-rejected fabrics into low-valued knitted garments operate under one-roomed home-cum-factory set up, mostly with their family members themselves participating in the production. The average selling price of these garments ranged between Rs 12 and Rs 45 per dozen pieces. A seasonal business, these goods are sold to small time retailers who in turn sell them at road-side/pavement shops in their States. This being the profile of this trade, insistence of sales tax registration and bringing our inter-State sale through `C' form route would be difficult to adhere to and make our operation unviable,' says Mr K.S. Babu who runs his own `seconds' hosiery garment unit under the Ikram Garments brand. He is also the secretary of the their local trade body, the Seconds Collar-shirt and Innerwear Small Manufacturers Association.

According to the association, most of the clients for the `seconds' garmenting units are from the States of West Bengal, Assam, Nagaland, Gujarat, Maharashtra and Rajasthan. `With the compulsory `C' form transaction, many upcountry buyers sourcing the `seconds' hosiery from Tirupur are now avoiding purchases as the sale done outside the `C' form route (by those not having the valid sales tax registration) would attract 10 per cent sales tax which will be difficult for the traders to bear,' said Mr Suban, president of the Association.

Mr E.A.K. Hakeem, another office-bearer of the association, said the stalemate in the trade caused by the CST regulations had cast a spin-off effect on downstream supply chain as the suppliers of factory-rejected fabrics were faced with stockpiling of fabric wastes in their godowns forcing them to curtail their operation. With the inter-State transaction proving worrisome, the Tirupur `seconds' garment producers are seriously thinking of setting up a `local textile shandy' in Tirupur itself on the lines of the one available in the nearby Erode. Creating such a market will help partly remove the uncertainty in selling the `seconds' garments, says Mr Babu.

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