New Delhi, March 18 In what could turn to be the initial economic casualties of the coronavirus crisis in India, hundreds of garment-manufacturing and export units operating out of Gurgaon, Noida and Faridabad face an uncertain future as they face closure of all operations till the month-end over precautionary measures.
Few factories have already suspended operations temporarily. While the move has come after state authorities have advised work-from-home for labour intensive industries, employees working in many of these units fear that temporary closure of operations may be followed by lay-offs as the garment industry was already facing a slowdown in orders that has been aggravated with the COVID-19 spread.
"We have been told to sit at home temporarily till situation improves and normal work could resume at the units. While some have the option to work from home, some technical work cannot be done outside the manufacturing units. We fear that the present shutdown may be used to trim workforce that owners feel is required to tide over sluggish market conditions," said Anirban who works in a garment unit in Faridabad.
Sandeep Sinha, who is a marketing and merchandise expert at an apparel export house in Noida, said that though they have not suspended operations completely but their operations are impacted in segments such as jeans and other made-ups that depend on processing and supplies from other labour intensive units where operations have come to a standstill.
Though no official numbers have come about the number of closure of garment units in the three towns, industry experts suggested that together Gurgaon, Noida and Faridabad may be having more than 3,000 garment manufacturing export units.
These are now said to be losing thousands of crores in the shutdown. The garment industry is already facing a major slowdown as shrinking of the world economy has resulted in lower size of order books. With travel restrictions now in place, several buyer-seller meets have also been postponed and few units face complete cancellation of export orders.
"India had a chance at reviving its garment industry as coronavirus outbreak in China gave them the opportunity to get a portion of the orders flowing to the neighbouring country. This had become a reality especially for finished clothes with buyers in US and Europe diverting business to India from China, where factories had shut down. But with shutdown in India too, this hope has also been dashed," said Sinha.
The demand for finished garments had reduced considerably in 2019, leading to several small export units shutting shop, industry experts say. A delay of around four months in GST refunds also took its toll, garment-makers say.
There were thousands of lay-offs in the industry last year. The spread of the virus in the country has now only expanded the scope of the problems. Meanwhile, Indian apparel exporters, who have been hit hard by the disruption in global value chain due to coronavirus, have pleaded with the government for an amnesty scheme to protect themselves from imminent defaults and failures.
Apparel Export Promotion Council (AEPC) Chairman A. Sakthivel, in a letter to Commerce and Industry Minister Piyush Goyal on Wednesday said that the current situation warrants urgent remedies and support to the apparel exporters from his end.
"It is sincerely requested and also a need of the hour that the Commerce Ministry brings out an Amnesty Scheme' for non-fulfilment/short-fulfilment of exports under various export obligation schemes, especially in a 'force majeure' situation such as the present one," Sakthivel said.
The apparel exporters, who were yet to recover from the reversal of policy benefits like MEIS and delays in refunds, have started facing uncertainties in terms of postponement of export orders and also over timely import of raw materials like fabric, interlinings and accessories.
"Since the last one week, many of the major brands and buyers from US and EU have asked for postponement of orders or shipments which have completely upset our business and schedule," Sakthivel said in his letter to the commerce minister.
Such uncertainties, coupled with a weak demand position in the major markets have started impacting the order position, production schedules, inventory pile up, working capital and export realizations, he added.
Given the disruptions in imports, the Council has requested for the extension of validity period of unutilised entitled value under EPC schemes by six months. It also asked for the extension of the validity period of Advance Authorisation to 24 months from the existing 12 months.
Further, the period for fulfilment of export obligation under Advance Authorisation should be increased to 36 months from the existing 18 months, it said.
( With inputs from IANS )