According to a survey of Indian garment exporters, the Indian garment industry has been severely hit due to order cancellations and delays during the COVID-19 pandemic, and cargo losses may reach US$3 billion.
The research conducted by Rajesh Bheda Consulting (RBC) in early April was based on data from different manufacturing centers located in Tirupur, NCR, Bangalore, Ludhiana, Panipat, Ranchi, and Chennai. Response from garment export organizations.
Although based on a relatively small sample of 60 responses, the survey results provide insight into the scale of challenges experienced by the industry during this wave of epidemics, and the impact on India’s 16-17 billion ready-to-wear garment industry. Potential impact of U.S. dollar market size.
The results of the survey titled “Measuring the Impact of the New Crown Pneumonia Pandemic on the Indian Readymade Garment Export Industry” mainly showed that each factory surveyed was canceled by customers and orders on hold totaling $1.49 million.
More than half of the respondents (56%) said payment was delayed, while in 19% of respondents, customers refused to pay for the order.
Among the canceled orders, 43% of cases did not receive payment, and 35% only received partial payment for materials. Only 22% said buyers had paid for materials.
RBC General Manager Dr. Rajesh Bheda explained: When we extrapolate the findings of the Indian ready-made garment export industry, this may result in $4.17 billion in export orders being canceled or put on hold by customers, It accounts for almost 25% of India’s annual readymade garment exports.
Since Indian industry orders are mainly executed in spring and summer, January to March is the peak production period, which is why the industry has been so severely hit.
Even if we take into account that participating factories may be more severely affected and therefore need to review the results, it is estimated that the total performance damage may reach 3 billion US dollars.
Dr. Bheda believes that India’s garment export industry may face unprecedented liquidity challenges, and the livelihoods of an estimated 12.9 million garment workers are threatened.
The industry is struggling to survive growing competition from Bangladesh, Vietnam and Pakistan, which have preferential trade relations with the European Union.
According to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), as of April 16, Bangladesh had orders of US$3.16 billion canceled or put on hold by customers, affecting The scope is expanded to 2.26 million workers.
However, BGMEA quickly collects and publishes data on order cancellations and suspended orders, which can help stakeholders effectively communicate the scope of the damage to international buyers. This has led to companies such as H&M, Marks&Spencer, Inditex, PVH, Kiabi, Target, and VF Corporation to be considerate and guarantee not to cancel orders that have been produced and are being produced.
Dr. Bheda said: India also needs to actively communicate with buyers, international media and trade delegations of importing countries to let them understand the need to adhere to ethical trading principles and Come up with feasible solutions to avoid order cancellations and delayed payments to survive the crisis.
He added: International brands must protect the livelihoods of the workers who produce their garments.
Raja Shanmugam, chairman of the Tirupur Exporters Association (Tirupur Exporters Association), representing Bangladesh’s largest knitwear manufacturing group, agreed. RBC’s analysis was correct, estimating its losses to hover around the amounts we expected.
Tirupur is completely focused on the Western market and we have to work on 2 fronts with an estimated physical loss of $1.5 million per unit and due to market closure and market in Intangible losses caused by the impact of not restarting for 6 months to 1 year.
The authorities should adopt a comprehensive recovery plan to address industry needs, thereby restoring the industry and the entire country’s economy.
Earlier this month, the Indian Textile Minister and the Indian Garment Export Agency called on global garment buyers to “do business with compassion” and not cancel orders.
