Tirupur knitwear exports units bank on compliance to win global markets

Tirupur knitwear exports units. Photo: T E Narasimhan
Esstee Exports Factory, a mid-sized company which supplies to international apparent brands such as Guess, BLDWN, Devred 1902, Jules, among others, lies slightly outside Tirupur main, about 490 km from Chennai. Enter the clean, spacious, well-ventilated interior of the single-storey factory unit and you find push-doors mandated by international safety regulations to facilitate easy evacuation in case of an emergency.

Esstee is one among the 1,200 units in and around Tirupur that have equipped themselves with dozens of national and international certifications to show that they adhere to an international code of conduct when it comes to running factories.

In another corner of Tirupur, Best Corporation, which is one of the largest exporters in the town, and mid-size exporters such as Poppys Knitwear, Warsaw International and others, also flaunt their updated safety standards and global certifications, and display them on big signboards.

The emphasis on compliance was stepped up in the wake of the fire in a Bangladesh garment factory in 2000 which claimed many lives. But even upto a decade ago, there had been allegations that the factories in Tirupur were sweat shops that exploited workers, employed child labour and operated under hazardous conditions.

Tirupur, which exports knitwear worth around Rs 25,000-26,000 crore annually, accounts for nearly 46 per cent of India’s knitwear exports. The textile units in this tiny town, which employ around 800,000 people, grew from generating exports worth Rs 75 crore three decades ago to doing business worth nearly  Rs 44,000 crore today. 

C Govindarajan, a legal advisor for compliance who audits the textile units on behalf of their customers, says eight compliances must be followed under the basic code of conduct, which is part of every global certification related to the running of such factories. 

These are: no child labour, no forced labour, no discrimination, equal wages based on categories not based on gender, prescribed working hours, health and safety standards, freedom of association and retrenchment policies. In some cases, individual buyers have their own compliance norms.

Even though the cost of compliance is high — anything between Rs 5 lakh and Rs 5 crore, depending on the size of the company — these units make sure that they follow the norms to keep their customers happy. Today, thanks to buyers doing business with only those who come with the necessary certifications, the evils of child labour, bonded labour, exploitation of women, and unsafe working conditions have been largely eradicated in Tirupur. 

In fact, industry experts say that from following the law of the land to adapting renewable energy and sustainable manufacturing, the exporters of Tirupur are far ahead of their counterparts in Bangladesh, Vietnam, Cambodia and others.

For the units, the compliance is necessary because export orders are mostly based on their ranks, which are given after audits by cross departments, by buyers and by an external and third party auditor appointed by buyers.

D K S Moorthy, client manager and accreditation auditor, Social Accountability Accreditation Services, an accreditation agency started as an independent department with Social Accountability International (SAI), says that the compliance largely depends on buyers; demand for certification. SAI has established the social certification standard SA8000 for factories and organisations.

Moorthy adds that while there is no big cultural change in terms of operations, there are a few top management personnel who think positively about the benefits of a system-based operation and hence adhere to the standard.

“With the younger generation slowly taking over, the conservative approach is being replaced with a desire for experimentation and innovation,” Moorthy says. 

Brussels-based Amfori (formerly Foreign Trade Association), which has developed the Business Social Compliance Initiative to monitor and assesses workplace standards across the global supply chain, says that the operations in factories is improving. The culture shift in recent years has also been spurred by such international guidelines as the ILO Core Conventions, United Nations Guiding Principles on 
Business and Human Rights, and Sustainable Development Goals (SDGs).

But there is a cultural shift under way in India too, points out Natasha Majumdar, Amfori Network Representative, India. “The introduction of the National Guidelines on Responsible Business Conduct and the Zero Draft of the National Action Plan a few years ago indicates that compliance is not just a need for foreign exports but is becoming a necessity in the Indian context too,” says Majumdar.

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel