Already struggling with many challenges, the Indian apparel industry has indeed landed in a more difficult situation now, owing to the COVID-19 pandemic. Some exporters have hinted that they are thinking of consolidation and can shut down a few of their factories if the critical situation continues even slightly. Apparel manufacturers, especially exporters, are claiming that it is the most severe crisis they have ever seen in their lives.
All leading apparel manufacturing hubs across India have already shut down their factories as well as offices from 23rd to 31st March so as to prevent the spread of COVID-19. Various state Governments have issued lockdown instructions.
“Apparel exporters have largely lost a complete season (mix of summer, back to school and winter season), as it will take at least three months to improve the overall situation and bring things back on track as they used to be. We are thinking to close one of our factories by next month,” told a top exporter of Delhi-NCR, on the condition of not disclosing his name. The company is having many factories across various states. He further added that market sentiments were already not much enthusiastic and now due to COVID-19, we are facing multi-directional negative impact. Few of our booked orders are cancelled and further order booking is also going to be definitely low. Factories are completely closed for the next 9 days, but staff and workers will be paid.
Raja Shanmugham, President, Tirupur Exporters Association (TEA), told Apparel Resources, “The situation is alarming. There might be a few buyers who can misuse this situation, can go for Chapter 11 and not pay the suppliers. SME apparel manufacturers will be affected heavily, and some of them might be forced to shut down.”
Apparel Export Promotion Council (AEPC) India’s official body of apparel exporters has already informed the Government that the apparel sector has been one of the worst-hit due to coronavirus, as it is deeply engaged with the global value chain. Around 75 per cent of Indian apparel exporters are now exposed to cancellation of orders and postponement of shipment. The uncertainty is expected to linger for at least next two months, impacting at least US $ 1 billion worth of shipments.
“If this critical situation continues for even a little longer, 50 per cent of the apparel factories of Noida will not be able to continue the business; they will have to wind up permanently. Even if the situation improves quickly, as all stakeholders are doing their best to control, 15 per cent business is gone for sure,” claims Lalit Thukral, President, Noida Apparel Export Cluster (NAEC).
Some of the almost ready shipments, which were or supposed to be inspected in just 2-3 days, are now laying in the factory premises and can’t be shipped before 1st April. There are enough chances of further delay in these shipments, depending on the situation. Even worse, these might have to be cancelled, as buyers are also under pressure, and so, they might have to deny these shipments.
“Our ready goods of Rs. 3 crore are laying in the factories. These were supposed to be shipped on Tuesday and Wednesday, but now we have no clue what will happen to these goods, as the buyer will let us know only after the lockdown is over,” shared a factory manager from Gurugram on the request of anonymity.
“It is too early to say anything about consolidation or long-term closure of factories by the owners, as all this depends on the gravity of COVID-19. One has to see that whatever and whenever industry will get orders, will they be feasible from the cost point of view. But it is for sure that a big part of the industry will be underutilising its capacity in future,” said Ajit Lakra, President, FICO Textile Division.
Apparel Resources talked to various apparel manufactures across India and realised that factories have been closed in all the areas of official lockdown. By the time of writing this, textile and apparel manufacturing hubs like Ahmedabad, Bangalore, Delhi-NCR, Ludhiana, Jaipur, Bhilwara, Gurugram, Faridabad, Panipat, Noida, Ghaziabad, Surat, Mumbai, Channei and Erode are following the lockdown, and none of the factories is operational at the moment.
Factories in Tirupur opened in the morning today, but are soon closing, as Tamil Nadu Government has also declared lockdown from Tuesday (24 March).
“All factories are following the Government instructions religiously and will pay to their workers as per rules/government instructions,” informed Aseem Singla, General Secretary, Garment Exporters Association of Rajasthan (GEAR). The Executive Committee of the association had an urgent meeting on Friday (20 March) and discussed all aspects of the current situation.
Spread in 1,000 acres and offering jobs to 22,000 workers, Brandix India Apparel City (BIAC), India’s largest apparel park, is also totally shutdown. The Hindu, the leading English daily, quoted P. Doraswamy, India partner, BIAC, “We took the step to close down all factories from the early hours of Saturday considering the directives issued by the Ministry of Health and the State Government.”