Seeking urgent intervention from the government, the apparel export industry has highlighted the serious problems being faced by the industry due to the coronavirus scare and appealed for a financial package for its survival.
It has sought immediate support of Prime Minister Narendra Modi in rolling out a specific financial stimulus package to protect the industry and its millions of workers as they struggle to survive the impact of Covid-19 on export orders, shipments, payments, and liquidity.
“Unless the government immediately announced an economic package, with a specific focus on the apparel export sector, given the fact that our products are ‘perishable’, our industry that employs 12.9 million workers, will die a slow death,” Apparel Export Promotion Council (AEPC) wrote in a letter to the Prime Minister.
Elaborating the situation of the apparel exporters, AEPC Chairman A Sakthivel, in the letter, said that overseas buyers and buying houses are either canceling or postponing confirmed export orders and are also holding back or indefinitely deferring the payment for goods already shipped/ ready to ship and asking for hefty discounts.
“Apparel industry is a seasonal industry and the products are similar to a ‘perishable commodity’ as they are a tailor-made, design-specific, fashion-specific export and any cancellation this year may be redundant and have little or no salvage value next year,” he said on behalf of the apparel industry.
The cancellations, deferments and postponement of shipments have resulted in packing credits being eroded, and impacted the fund-liquidity position of the exporters, which is in a precarious condition, as the cash flows have completely stopped, he added.
Sakthivel thanked Textiles Minister Smriti Irani for making a special appeal to the international buyers not to cancel the orders and do “commerce with compassion”.
He also shared the gist of the economic stimulus packages announced by the Governments of Bangladesh and Thailand with the Prime Minister.
While applauding the decision of the government to lock down the country till April 14, 2020 in the larger public interest, Sakthivel highlighted the fact that the apparel industry is one of the largest employers engaging 12.9 million workers directly and is also one of the largest employers of women with 65 per cent of the workforce.
About 70 per cent of the apparel units are in the MSME sector. It is imperative to note that the member-exporters strictly comply with national and international norms, and adhere to the highest levels of social responsibility, he stated. He also drew PM’s attention to a report of Moody’s reflecting the concerns of the Apparel industry globally.
In the apparel sector, labour costs form the single largest component of product costs where workers’ wages are in the range of 25-30 per cent of the product cost as opposed to the industry norm of 7-8 per cent. Further, we operate under extremely competitive margins in the range of 3-4 per cent, and are completely dependent on export benefits granted by the government, he said.
“We pray and request for a ‘unique financial stimulus package’ specific for our apparel industry, as our situation is different from the requirement of the other textiles industries or any other industry per-se,” Dr Sakthivel said listing the needs of the industry.
AEPC has also sought deferment of the payment of GST dues for a period of three months without penalty.