Indian clothing manufacturers hit hard by second wave of Covid | Apparel Industry Analysis
India’s death toll from Covid has now reached 201,187
India’s clothing and textiles manufacturing sector faces further disruption as the country is hit by a brutal second wave of Covid-19.
“The work has [partially] gone, production is down and demand is falling, “Sanjay Arora, commercial director of the consultancy firm Wazir Advisors, told Just-Style. The spinning mills are operating with reduced capacities, because 15 to 20% of their workforce suffers from Covid-19, he says.
India experienced its worst day of the pandemic Wednesday, April 28, reporting 360,960 new cases in the past 24 hours – the largest single-day increase in the world – and 3,293 more deaths. The death toll in the country has now reached 201,187.
The spike in infections is expected to hamper the ability of manufacturers to honor delivery contracts.
“We have some good [export] orders, but because of the pandemic, migrant workers are leaving clothing clusters, especially in Maharashtra, Delhi, Bangalore, âsays Arora.
As clothing manufacturing was constrained by labor interruptions, demand for polyester fibers also fell, causing problems for spinners. These companies have export orders, which are not affected, but distribution is a headache as the pandemic has hit container and shipping line operations.
Additionally, spinners were relying on domestic demand and had not focused on planning for shipping contingencies – an issue given that freight slots need to be booked well in advance, Arora noted.
The latest problems could disrupt the financial recovery of Indian clothing and textile companies from October to February, he warns.
Continue to operate
Kandasamy Selvaraju, secretary general of the Southern India Mills Association, says he’s happy the government is at least allowing the industry to keep operating. He argues that some “workers will be safer in factories than at home,” given the density of the residential population in many Indian cities.
He does not expect the government to save the industry with additional major subsidies.
“Last year the government had to spend Rs.21 lakh-crore [INR21 trillion â US$282 billion] on a relief fund, and you can’t expect the government to come up with relief again because we don’t have the funds. ”
Selvaraju points out that the new Covid-19 wave is preventing crucial face-to-face meetings: “Not everything can be done online. In textiles, people have to see the designs of the fabrics.”
Ujwal Lahoti, owner of Mumbai-based Lahoti Overseas, which supplies yarn, fabric and raw cotton to Indian garment exporters and overseas customers in China, Bangladesh, Vietnam, Latin America and Europe, acknowledges that the current crisis poses major logistical challenges.
To maintain their workforce, workers often have to stay in the factory to avoid outside infections, so they need to be fed and housed on site.
Every worker should be regularly tested for Covid-19. âOrganizing all this work internally is a very important task. The factories are operating at an average efficiency of 50%, âhe says.
Each factory has workers who stay on campus, with companies needing special travel passes to bring outside labor inside their factories.
Such a disruption will inevitably affect production and deliveries, Lahoti says.
âThere will be lossesâ, even if customers in the garment and textile industry are kept informed. “Everyone who can accept delayed shipments accepts them and those who cannot cancel them.”
“Shipping companies have increased their transport costs and the number of ships has been reduced. The availability of containers is also very poor. It is also a very big challenge for exporters,” says Lahoti.
Different locking rules
A logistical problem is that each Indian state has introduced different foreclosure regulations.
Chandrima Chatterjee, current director of compliance, economics and advice at the Apparel Export Promotion Council, says most garment and textile factories have “been able to keep producing.”
She says exports from key states such as Tamil Nadu, Maharashtra and Rajasthan are expected to continue. âThis is not the scenario of last year,â when the export trade stopped, she said.
While the capital Delhi is on lockdown until May 3, garment manufacturing facilities in the Indian state of Karnataka have been allowed to operate with 50% of their workforce during its current two-week lockdown.
The state went into lockdown on Tuesday (April 27), with an official order affirming that all social, political, sports, entertainment, academic, cultural, religious and other gatherings and congregations are banned and religious places will remain closed to the public until May 12.
According to local reports, all industries, industrial establishments and production units related to the manufacture of clothing are allowed to operate provided they adhere to the appropriate behavior of Covid.
In a statement posted on the AEPC LinkedIn page yesterday (April 28), the President of the Apparel Export Promotion Council (AEPC), A Sakthivel, thanked Textile Minister Smriti Zubin Irani and Yediyurappa for allowing clothing manufacturing units to operate as requested.
âGarment export units are labor intensive and most of them are migrants from other states. Factory closures would have made their return difficult. resulted in failure to deliver export orders to foreign buyers, loss of credibility, and a significant reduction in export earnings.
âMost of the garment manufacturing units also manufacture medical textiles, PPE kits and masks for domestic and international markets,â he noted.
According to credit rating agency ICRA, part of Moody’s Investors Services, India’s apparel industry may not experience a full return to pre-Covid levels until 2023.
With additional reporting by Beth Wright.