As coronavirus pandemic gripped China, which is a major block in India’s textile value chain, the Indian textile industry went into frenzy and started looking for solutions and alternatives to beat the situation. Here are the immediate repercussions of the outbreak starting March 2 until the entire country was locked down on March 24.

March 2, 2020

Stressed Chinese Manufacturing Industry, India Ready to Tap the Market

In the beginning, when the coronavirus (COVID 19) pandemic was wreaking havoc in Wuhan, a city of China, Associated Chambers of Commerce of India (ASSOCHAM) proposed to the Indian exporters that they should tap the market shares of particular products which were previously fulfilled by China. Out of these markets – agriculture, carpets and leather goods were the significant ones. ASSOCHAM also advised that Indians must form a clear strategy to stay ahead of competitors such as Bangladesh, Indonesia and Vietnam, who were also trying to revamp their export strategies.

According to Purchasing Managers’ Index (PMI) data, a sharp reduction was observed in the manufacturing of China in February ‘20, lowest in around two decades. The index has declined to 35.7 per cent from 50 in January, as per the data released by China’s National Bureau of Statistics. Also, China’s employment index has declined by 15.7 per cent points to 31.8 per cent from the previous month.

India is looking for alternative markets apart from China to import over 1,000 items including textile fabrics. China, which approximately accounted for over 50 per cent of India's imports, has been hit by coronavirus spread. Apart from fabrics, exports of textiles yarns were also adversely affected as China and Hong Kong are major yarn buyers.

India Started Isolating from the World

India had suspended visas, e-visas for Iranians and other foreigners who had been to Iran after Feb 1. Also, the screening of the passengers coming from China, Hong-Kong, Singapore, Thailand, South Korea, North Korea, Japan, Indonesia, Malaysia, Nepal, Vietnam, Iran and Italy were done by the airport health officials (APHO) in the airport.

March 3, 2020

Polyester Yarn Supply Chain Impacted Due to COVID-19

The raw material prices of the polyester have been moving down with outbreak of COVID-19 in China. Hence the demand and production of polyester yarn in China got disrupted. With abolition of anti-dumping duty on PTA, export of polyester yarn from India will be boosted by increased operating profits of 15 to 20 per cent next fiscal. Madhu Sudhan Bhageria, CMD, Filatex India Ltd, told Fibre2Fashion that the growth has been achieved because of lower raw material prices and healthy demand of polyester and higher blends in garments and other products.

COVID-19 Pandemic Puts Pressure on Manufacturing in February

After touching an eight-year high in January, India’s manufacturing sector’s growth slowed in February due to impact of Covid19 outbreak on exports and supply chains. The manufacturing PMI for India has declined from 55.3 in January to 54.5 in February. A figure of above 50 indicates expansion, while a sub-50 print signals contraction.

According to the survey carried out by IHS Markit who tracked new orders, output, jobs, suppliers’ delivery time, and stocks of purchases for around 400 manufacturers, factories in India got strong orders in February from both the domestic and international markets.

HDFC Bank’s chief economist Abheek Barua said that India approximately imports 14 per cent of its imports from China. India is dependent on China for manufacturing inputs which impacted the domestic textile and apparel production. The limited production capacity of India and competition from Vietnam and Cambodia are the major constraints to make it self-sufficient in the raw materials.

March 4, 2020

Tiruppur Textile Exporters Faced Price Hike in Raw Materials 

China is a major supplier of specialty chemicals for textiles, especially Indigo required for denim. Hit by COVID-19, the textile processors in the knitwear town of Tiruppur faced shortage of dyes and chemicals, according to the Dyers Association of Tiruppur. Most of the raw materials such as reactive dyes and chemicals are purchased from China. At present, the prices of these dyes and chemicals have risen by 10 to 20 per cent. The association also pointed out that only cash transactions have taken place. Approximately 20 per cent of the production has been affected due to disruption in raw material supply.

Garment Manufacturers Started Sourcing Locally

Ashok Kumar, president, The Textile Association of India (TAI), told to Fibre2Fashion, that the garment manufacturers in India are now focusing on supply from Ahmedabad and Surat for fabrics with closure of supply from China. China has approximately 35 to 40 per cent share in the manufacturing of global textile and garments. India majorly exports cotton yarns and cotton to China. China accounted for 40 per cent of the India’s total cotton yarn export. Due to shipment stuck and pending LC against the orders, traders are expected to get curtailed demand from China. This may result in the fall of price by nearly 5 per cent supported by excess availability locally. The price in India for Ne 30s combed yarn dropped to ₹ 205 per kg from ₹ 215 per kg before the virus outbreak and price of raw cotton slashed to ₹38,500 per candy of 356 kg compared to ₹40,500 per candy earlier.

Kumar also said that India imports synthetic yarn of around $450 million and synthetics fabrics of $360 million from China in a year. India is not able to cater to this huge domestic demand. So, it increased the price of finished goods by 3 to 5 per cent. Indian textile industry also imports majority of pigments and colours from China. It has already upped the prices of dyes by approximately 10 per cent. Fabrics, mainly synthetics, which are usually exported from China by garment exporters, are also currently in short supply.

Some global orders of finished garments have been shifting from China to India and other countries. India is expected to become a preferred market for sourcing of apparel products by buyers from the US, Europe, UK and Canada. Also, India can export raw materials like yarns, fabrics, and dyes to all garment manufacturing countries such as Bangladesh, Sri Lanka, Vietnam, who majorly import these materials from China.

India’s Economy Growth Slashed 

Organisation for Economic Cooperation and Development (OECD) slashed India’s growth forecast for 2020-21 by 1.1 percentage points to 5.1 per cent, warning that the impact of the Covid-19 outbreak on business confidence, financial markets and the travel sector, including disruption to supply chains, could shave 50 bps of global growth in 2020.

March 5, 2020

Domestic Cotton Spinners Further Impacted

According to Information and Credit Rating Agency (ICRA), with a good recovery in January after the poor performance in last 9 months, weak export demand resulted in declining cotton yarn realisations. The domestic cotton spinning industry is highly dependent on exports, particularly to China, with 30 per cent of the yarn produced in India being exported, and China accounting for nearly 1/3rd of the exports in recent years.

Hosiery Prices Surged in Ludhiana with Reducing Chinese Imports

Hazuri Road Hosiery Association president Harkirat Singh Rana said that severe Covid-19 outbreak in China has increased cost of the hosiery industry in Ludhiana as the shortage of stock has propelled the prices of fabric and accessories. Retailers are selling accessories such as buttons and needles at a higher price, for example price of a box of buttons has increased to ₹125 which were previously priced at ₹100. The price of 100 needles from China has shot up from ₹1,500 to ₹2,200.

Coir Geotextiles Trade Hampered

With the outbreak of COVID-19 in China, coconut producing states such as Kerala, Tamil Nadu, Orissa, Karnataka and Andhra Pradesh, have increased production to fulfil the mass orders of coir geotextiles. India’s domestic coir market and coir exports were ₹1,200 crore and ₹2,728 crore respectively. Despite coir geotextiles playing an important part in soil bioengineering, like strengthening riverbanks, roadbuilding and landfills, it enjoys less than 40 per cent share.

According to SK Gowthaman, member, Coir Board of India, China is the major importer of coir from Tamilnadu. It has stopped giving orders or even collecting consignments. The few buyers such as the US, Europe and Australia were on. Also, the payment for the coir pitch exports from October onwards was pending as per S Mahesh Kumar, president, Coir Pith Exporters’ Association. Kerala is targeting 25,000 tonnes of coir geotextiles production by 2020/21. In the current year, the state government has signed procurement agreements with retailing giants Ikea and Reliance.

March 6, 2020

COVID-19 Impact on Cotton Business

According to Confederation of Indian Industry (CII), due to COVID-19, the slowdown in cotton yarn exports has reached 50 per cent, which is severely impacting the spinning mills of India. Due to this, textile units would not be able to repay annual interest to financial institutions. Hence the cotton demand is moving down and affecting the farmers’ revenue.

Estimation of Trade Impact by UN 

As per the United Nations Conference on Trade and Development (UNCTAD), India stood at rank 15 in the list of most affected economies due to COVID-19 and slowdown in production in China caused a trade impact of $348 million. Out of $348 million, textiles and apparel accounted for $64 million.

Fall of Cotton and Synthetic Yarn Prices

Cotton and yarn prices have moved down by 10 per cent in the past one month with abundant supplies after drastic decline in exports to China. Prices of raw (unginned) cotton in Gondal (Gujarat) market were slashed by approximately 10 per cent to ₹4,280 per quintal from ₹4,755 per quintal a month ago. Synthetic yarn declined by 4 to 5 per cent during the past one month, following a fall in crude prices.

Cotton Corporation of India (CCI) has offered a discount of ₹3,200 to 5,000 per candy (1 candy = 356 kg) for old stock purchased in bulk. The reduced raw material prices may benefit textile mills and they may get higher profit margins in the coming quarters.

Jayanta Roy, Senior Vice President and Group Head, Corporate Sector Ratings, ICRA said that international cotton prices further moved down and lingered at low levels as compared to domestic market. Synthetic yarn prices such as that of polyester yarn dropped as China accounted for around 65 per cent of global demand. Eventually, the price of PTA, a key raw material that accounts for more than half of the sales price of polyester yarn, is expected to be under pressure in the near term.

March 7, 2020

Cotton Trade under Pressure

Trade insiders say that the global factors coupled with increased arrival of cotton in the domestic market have led to price correction by 8 to 10 per cent in the past one month to touch ₹38,500 a candy (each of 356 kg of ginned cotton of 29 mm variety).

The Cotton Association of India (CAI) retained its crop outlook at 354.5 lakh bales (each of 170 kg) for 2019-20. Arun Sekhsaria, managing director of DD Cotton said that there were hardly any buyers in the overseas markets, except Bangladesh. Daily arrivals in the domestic market have peaked and now reduced from earlier 2.4 lakh bales per day till last month to about 1.3-1.4 lakh bales per day.

As per the CAI data, cotton bales that arrived during the months of October 2019 to February 2020, were estimated at 254.43 lakh bales, which was 213.42 lakh bales last year around the same time. Approximately 100 lakh bales are yet to arrive in the markets, which traders were expected to get by the end of March or early April. For the moment, CCI is learnt to have continued the purchases from the farmers, to support them from falling raw cotton prices.

According to Bloomberg, CCI has purchased about 75 lakh bales for the year.

This was a beneficial proposition for farmers as they got about Rs 500 to Rs 700 more from the private trade. An Ahmedabad-based cotton exporter said that Indian cotton has good prospects in Vietnam, Turkey and Far Eastern Countries besides Bangladesh.

Yarn Prices Fell as Andhra Pradesh Cotton Exports Dropped

Approximately 200 containers (25 metric tonnes each) of cotton yarn is sent to China from Andhra Pradesh, but China’s trade war coupled with COVID 19 has brought this to nearly zero. India has a high capacity for spinning, but not for weaving and garment making. Hence India has to export yarn, according to All India Cottonseed Crushers Association (Mumbai) and AP Chambers Federation (Vijayawada).

Handlooms and Textiles director and APCO managing director Himanshu Shukla said that the government was taking all necessary steps. The industry has been planning for diversification of exports and imports. India can increase trade in East Asian countries too.

March 11, 2020

Moody’s Cuts India Growth Forecast Curtailed with Dampened Domestic Demand

Moody’s Investors Service on Monday cut its growth forecast for India to 5.3 per cent for 2020 from 5.4 per cent estimated earlier, as it expects the coronavirus outbreak to dampen domestic demand globally.

World Turned to India for Textile Trade

After the outbreak of COVID 19 in China, Indian spinning mills and textile units received fresh enquiries from the US, EU and Russia. Manjeet Singh Chawla, president, Madhya Pradesh Cotton Ginners and Traders Association, said that spinning units of the region (running at half of their capacities) may pick up momentum on fresh demand. This would help India to save from losses caused due to curtailed export to China.

Abundance and higher prices of cotton might be a challenge for spinning mills locally as most of the fresh produce is procured by state-run agency Cotton Corporation of India with prices below government fixed minimum support prices. The Madhya Pradesh Textiles Mills Association said that India was getting fresh enquiries for garment from overseas.

March 12, 2020

Least Impact on Cotton Exports

According to Cotton Association of India (CAI), India had exported 8 lakh cotton bales to China last year and this year 6 lakh bales have already been shipped till February end. The demand from other markets such as Bangladesh and Vietnam will keep the exports at the same level as last year. Hence Indian cotton exports would not get much affected. Also, the exports of cotton garments have slightly declined at a rate of 4 per cent. 

March 13, 2020

Texprocil Rescinded Ind-Texpo Event 

The Cotton Textile Export Promotion Council (Texprocil) has cancelled the second edition of its flagship event, Ind-Texpo 2020, a specialised Reverse Buyer Seller Meet to be organised at Coimbatore in Tamil Nadu from March 17 to 19 with the outbreak of COVID 19 worldwide. The event had over 70 exhibitors showcasing top quality yarns, apparel fabrics, denim fabrics, and home textiles with expectation of over 100 quality importers from over 25 countries to visit the event.

Exporters Seek Duty Reduction, Logistics Support from Centre

The Department of Financial Services (DFS) has asked the Insurance Regulatory and Development Authority of India (IRDAI) to review existing insurance products to give risk cover against loss because of abnormal delay in delivery of shipments. IRDAI has also been asked to modify the terms and conditions of such policies, if necessary.

DFS advised all public sector undertakings to set up special cells to provide full assistance to industry segments and micro, small and medium enterprises, and process their requests with sensitivity. Banks were also requested to provide support to units that were identifying opportunities for import substitution.

Textile Yarn Exporters Faced Losses

Indian yarn exports fell 30 per cent in January and February compared to previous year. According to the Cotton Textiles Export Promotion Council (Texprocil), 11 countries including China, Iran, Korea and Vietnam buy 41 per cent of India’s cotton yarn exports and these countries have reported Covid-19 cases. In the case of home textiles, the biggest markets include France, Germany and the US.

The Apparel Export Promotion Council had asked garment exporters to explore alternative sources such as Japan for woven fabric made out of artificial filament yarn, slide fasteners and parts, sewing machines, furniture, bases and covers, and sewing machine needles.

A Sakthivel, chairman, AEPC asked Indian exporters to tap opportunities of apparel exports to the US and Israel. He also asked them to find other sources for raw materials and intermediates.

Sakthivel had also approached the government to direct Indian embassies abroad to identify alternate sources of input suppliers. AEPC has identified top 10 apparel product lines or items each in the US, the EU, Japan and South Korea which are showing significant decline in imports from China. Now India needs to tap these markets to increase its own apparel exports.

March 17, 2020

Exporters Seek Financial Support

Tiruppur Exporters’ Association (TEA’s) European buyers, particularly from Italy and Spain, have asked TEA members not to export the garments to them and wait for a minimum of one or two months till the situation is normal and the shops are re-opened. Some buyers have already cancelled the orders. The buyers are deferring the payment of the already sent goods. Hence TEA, the country’s leading knitwear/readymade garments cluster, requested government for financial support including moratorium period for repayment of loans and interest equalisation scheme on pre-and post-shipment rupee export credits.

Textile Yarn Industries to Collapse

Thiagarajan, chairman of the Tamil Nadu Chapter of the Confederation of Indian Industry, is also asking for a moratorium on interest payments and protection from being branded by banks as non-performing assets for the yarn industry. In addition, they also want the government to extend the scheme that provides Rebate of state and central taxes and levies (RoSCTL) to yarn. He also sought curtailed import duty on key inputs for the textile industry such as chemicals, dyes, resins and non-woven fabric. He also requested the Tamil Nadu government to temporarily lower electricity tariffs by one or two rupees while the COVID 19 threat persists.

CCI Continued Cotton Purchase at MSP Despite COVID-19 Outbreak

Atul Ganatra, president, Cotton Association of India (CAI), said that approximately 60 per cent of the cotton has already arrived in the market till date. Daily arrivals were to the tune of 1.30 lakh bales and the arrivals were gradually reducing. Farmers who have around 30 per cent of the produce were holding onto their crops seeking better returns. Currently, cotton prices are ranged between ₹38,000 per candy to ₹38,500 per candy for good quality cotton. Nearly 10 days ago their prices ranged between ₹40,000 to ₹42,000 per candy. Prices were consistently declining due to market condition. CCI may not purchase cotton till March 31 and would follow directives from district collectors to avoid crowds. Cotton purchases may dwindle in the next 15 days. Ginning units are functioning on a skeletal basis and only as per need and trade could come to a stand-still in a few days.

Apparel Exporters Faced a Cut in Profits

Due to the COVID 19, apparel exporters are expected to report a moderate profit this fiscal, with pressures likely to sustain at least in the near term.

The apparel industry is facing challenges such as increased bargaining power of buyers, cost-side pressures, and write-backs of export incentives booked previously which are impacting the profitability. Sustained pressure on liquidity due to delays in clearance of the government dues, will lead to operating profit of the apparel exporters to fall by 100-150 bps in this fiscal. It resulted in a moderation in debt coverage metrics and impacted smaller companies, with limited bargaining power with customers, modest liquidity cushion and less financial flexibility to absorb the impact.

March 18, 2020

Textile Associations Seek Financial Support to Recover from COVID-19

Ashwin Chandran, chairman of Southern India Mills’ Association has asked government for financial help as the buyers from Europe, UK and US have put purchases on hold. If the situation persists for two to three weeks, exporters will have to cut production. Chandran has asked for following measures.

  • Extension of the scheme for reimbursement of taxes andlevies for cotton yarn and fabric exports.

  • Provision of 3 per cent interest subvention beyond March 31,including products such as quilts and cotton shopping bags for Reimbursement ofState and Central Taxes and Levies (ROSCTL).

  • Expedition of GST refunds.

  • The banks should provide one-year moratorium for repayment of principal amount and interest.

According to T Rajkumar, chairman of Confederation of Indian Textile Industry, banks should provide moratorium for repayment of principal and interest amounts and exempt raw materials from anti-dumping duty and customs duty.

Sakthivel has asked for following measures.

  • Faster banking and packing credit clearances

  • The packing credit period for existing orders should beextended up to a period of 360 days from the existing 270 days

  • Existing limits for exporters should be enhanced by 25 per cent

According to the Tiruppur Exporters’ Association president Raja Shanmugham, the government should announce a stimulus package and re-energise the market. The Indian Texpreneurs Federation convenor Prabhu Damodharan said that working capital loans should be converted into long term loans for the needy units, the working capital gap should be identified and working capital term loan should be provided.

Textile and Garment Exports Declined by 40 per cent

India's export of textile and garments were expected to drop by 40 per cent in coming months due to halt in shipment to COVID -19 countries, according to K V Srinivasan, chairman, Texprocil. Srinivasan urged the government to extend urgent policy interventions /support in order to provide fiscal relief and ensure credit flow with extension of ROSCTL scheme to cotton yarn and fabrics so that India’s competitiveness is enhanced at a time of the falling markets. Also, there was a need to extend interest subvention of 3 per cent beyond March 31, 2020, and also cover cotton yarn within that to ease the financial burden, etc.

Textile Industry Bodies Seek Relief Package

The Confederation of Indian Textile Industry (CITI) has requested government for following steps.

  • A relief package for the textile and apparel sector

  • Reduction in bank interest rate

  • Extension of soft loans equivalent to government duespending in the books of individual textile units that could be adjusted as soonas the government clears the dues

  • Moratorium for repayment of principal and interest amount tothe banks for four quarters (April 1, 2020 to March 31, 2021).

  • Exemption of all raw materials, dyes and chemicals,intermediaries, spares, accessories, etc, from anti-dumping duty and basiccustoms duty

  • Include cotton yarn and fabrics under RoSCTL, InterestEqualisation Scheme (IES) and Merchandise Exports from India Scheme (MEIS)benefits with immediate effect to prevent unemployment in the handloom, powerloom and spinning sectors

  • Enhance IES benefit for all textiles and clothing exports to 5 per cent; and reduce the bank interest rate by 3 per cent.

March 20, 2020

Stagnation of Rayon Fabric worth Rs 50 crore

Approximately over 30,000 power looms in Erode district remained closed due to the recent restrictions put to prevent spread of COVID-19; shops in and around Gani market were closed. Convener of Erode Powerloom Owners’ Association P Kandhavel told that wholesale textile markets in South India have been shut and as a result rayon fabric worth Rs 50 crore languished in the godowns. The players who have already purchased products were not able to make payments.

March 21, 2020

SBI Announcements in Light of COVID-19

State Bank of India (SBI) has started emergency credit facility for borrowers affected by the COVID-19 situation. A maximum loan amount of up to ₹200 crores or 10 per cent of the existing fund based working capital limits can be availed under this emergency line. The facility will be available till end of June and will be specifically aimed at MSME borrowers. These loans will be given at a flat rate of 7.25 per cent.

All standard accounts which have not been classified under the category of special mention accounts 1&2 as on March 16 will be eligible. Existing SBI customers who have availed special loan products under the MSME category can also avail this facility.

The borrowers will be able to avail the entire amount in one go and will be repayable in six instalments after a moratorium period of six months from the date of disbursement of the loan.

With COVID 19, the Indian Banks Association is looking for relief measures from the Reserve Bank of India including an extension of 90 days in classifying accounts as non-performing assets (NPA) and deferring the instalment of term loans. They also requested to allow deferment on loan payments for a specific period, a per cent cut in the cash reserve rate and a six-month extension for cases which are undergoing resolution under the inter-creditor framework. NPAs in the MSME segment are already running at sub 12 per cent and are expected to rise further from current levels.

Consumer Confidence Index Affected

On February 17, the Reserve Bank of India’s consumer confidence survey revealed that the current consumer confidence index had dipped to 83.7 (where 100 is the dividing line between pessimism and optimism), the lowest since March 2015. On March 6, FDCI postponed the Indian Fashion Week, scheduled from March 11 to 14 in New Delhi.

Indian Apparel Firms Fight Against COVID-19

Several Indian apparel brands, e-commerce firms and textile bodies have geared up to face the impact of the COVID 19 by implementing measures, including ‘work from home’ option for staff with proper communication.

There was a drop-in conversion rate last week from the company’s e-commerce site and app with challenges in shipping and increased delivery time. Outsiders were not allowed inside the plants; people were screened, and thermal check-ups were conducted.

March 23, 2020

E-commerce Trade

Anil Kumar, founder & CEO, RedSeer Consulting told that e-commerce slowed down in January and February after the hectic buying in festival season. It increased in March due to Holi and Ugadi. Home & Furniture showed 15 to 20 per cent increase in gross merchandise volume (GMV) with increasing sales of small ticket items such as home decor, linen, bed/bath accessories. Fashion showed 30 to 35 per cent increase as people spent more time browsing apps while working from home.

Freight Rates Set to Move up

Short haul trades (less than 14 days voyage time) are hit with high freight rates for shipping commodities into India from countries infected with COVID 19 as it is mandatory to wait outside the port till the two week period ends before allowed to unload cargo. Fleet owners will budget in the extra costs to comply with the 14 days requirement.

Impact on Garment Business

The situation for textiles and garments exporters became worse due to shutting down of stores in the US and European markets. The situation was lenient a week ago, but in the last three days, it has gone from bad to worse. All the stores in America and Europe are shut. Customers have cancelled all orders and some buyers have returned the shipments.

Working of 400 Textile Units, 250 Factories Suspended in Bhilwara

Shutdown in Bhilwara have kept around 400 textile units and 250 factories closed for the last three days where patients of COVID 19 surged to 12 on Sunday.

Surat Textile and Garment Business Stopped

President of South Gujarat Textile Processors Association (SGTPA) told that all the textile processing units and power looms in the city and district would remain close till March 24 to avoid the spread of COVID-19.

Also, Mahendra Ramoliya, chairman of the Sachin Notified Area Authority, has closed all the units in Sachin GIDC till March 24. Authority would review the situation and decide whether to extend the closure in the estate after March 24. Vapi GIDC has also declared that all the units in the estate will remain closed till March 29.

March 24, 2020

Textile Units Halted in Tamil Nadu

Garment exporters in Tiruppur and home textile exporters in Karur have suspended the activities of production from Tuesday. Textile mill units decided to down shutters till March 31. Tiruppur has over 1200 exporters and thousands of supporting units. Approximately six lakh workers are working there.

Shanmugam requested government to extend financial support to pay wages to the workers. The district administration has stopped all trading activities in the district. The goods worth ₹750 crore will not be produced from Tuesday for eight days according to M Nachimuthu, president of Karur Exporters’ Association. The units would pay wages to the workers for these days. Only 20 per cent of the buyers have shown an interest to place orders.

The Southern India Mills’ Association have suspended all the operations till March 31 or till normalcy. The units that are weak to operate will be laid off and 50 per cent wages will be paid, said M Senthil Kumar, head of the Palladam Hi-Tech Weaving Park.

Exports Crashed Despite Rupee Slide

Due to COVID 19, India’s exports to the world have moved down majorly to the EU and the US despite the rupee depreciation. While the rupee has weakened by almost 4 per cent against the greenback in March, the currencies of competitors such as Indonesia and Malaysia have depreciated at a sharper pace, by over 11 per cent and 5 per cent, respectively.

Apparel Industry to Collapse

Apparel industry is panicking over the order cancellation by European buyers as EU consumed almost half of India’s textile and garment exports worth $40.4 billion in 2018-19, out of which 50 per cent were ready-made garments (RMG). Major brands such as H&M, Zara and Mango have started cancelling orders or holding shipments, informed Animesh Saxena, president of Federation of Indian Micro and Small & Medium Enterprises (FISME). The apparel exporters have urged the Reserve Bank of India (RBI) to support the sector in managing financial viability as they are facing severe crisis due to the outbreak of COVID 19.

The AEPC has urged RBI for the speedy clearance of banking and packing credit to the industry. As the orders have been postponed by three to six months, the council has requested to extend the packing credit period for existing loans up to a period of 360 days from the existing period of 270 days.

The domestic cotton spinning sector is facing negative growth sentiments in current fiscal amid multiple headwinds. However, the recent developments could prolong tough times for the spinners according to ICRA. The ‘negative’ outlook is being maintained on the cotton spinning sector.

March 26, 2020

India Locked Down for 21 Days

India has announced complete lockdown for 21 days till April 14 to avoid spread of COVID 19 pandemic. Indian Prime Minister Narendra Modi told on Tuesday said that from 12 midnight tonight, the entire country would go under a complete lockdown. There would be total restriction on venturing out of your homes.

Every state, every union territory, every district, every village and every locality would be put under lockdown. Hence the factories will be shuttered until April 14, and already pressured production could face further strain.

Government’s Financial Support Can Save Jobs: MSMEs

“There is a symbiotic relationship between employers and workers. No employer would want to retrench now especially as they would need to hire again when normal times are back. But with shipments and payments stuck and cancelled orders, MSMEs are not able to maintain their workforce,” said Animesh Saxena, an exporter of garments based in Gurugram.

According to an official from the Ministry of MSME, a relief package for sick and stressed MSMEs would be announced in next 10 days. The government must give some easy credit to units. For instance, it could give them 25 per cent of our sanctioned limit with a moratorium on interest for six months. The MSME sector accounted for more than 90 per cent of manufacturing enterprises, 45 per cent of industrial output and 40 per cent of exports in India. They also provide employment to more than 60 million people.

Anil Bhardwaj, secretary general, Federation of Indian Micro, Small & Medium Enterprises (FISME) told that sectors such as garments and leather where payment is made on piece wage basis, it is difficult to ensure wages when pieces are not getting produced. However, employers should make payment to workers at times of crisis. Indian government should pitch in, where workers are employed on a permanent basis, large scale layoffs are not happening yet. If the crisis extends then the government will have to chip in to pay part of the bill.