Indian garment makers hit hard by second wave of Covid

India’s garment and textile manufacturing sector faces further disruption as the country is hit by a brutal second wave of Covid-19.

“Work has [partially] disappeared, production is down and demand is down,” Sanjay Arora, chief commercial officer of consulting firm Wazir Advisors, told just-style. Spinning mills are operating at reduced capacity, with 15 to 20% of their workforce suffering from Covid-19, he said.

India had its worst day of the pandemic on Wednesday April 28, reporting 360,960 new cases in the previous 24 hours – the highest single-day increase in the world – and 3,293 additional deaths. The country’s death toll has now reached 201,187.

The upsurge in infections is expected to hamper manufacturers’ ability to honor delivery contracts.

“We have good [export] orders, but because of the pandemic, migrant workers are leaving garment clusters, especially in Maharashtra, Delhi, Bangalore,” says Arora.

With garment manufacturing constrained by the labor disruption, demand for polyester fibers also fell, causing problems for spinning mills. These companies have export orders, which are unaffected, but distribution is a headache as the pandemic has affected container and shipping line operations.

Additionally, spinners were relying on domestic demand and had not focused on planning for shipping contingencies — a problem given that freight slots must be booked well in advance, Arora noted.

The latest problems could disrupt the financial turnaround achieved by Indian garment and textile companies from October to February, it warns.

continue to operate

Kandasamy Selvaraju, general secretary of the Southern India Mills Association, says he is glad the government is at least allowing the industry to continue operating. He argues that some “workers will be safer in factories than at home”, given the dense residential population in many Indian cities.

He does not expect the government to rescue the industry with large additional subsidies.

“Last year the government had to spend Rs 21 lakh-crore [INR21 trillion – 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 wave of Covid-19 prevents crucial face-to-face meetings: “Not everything can be done online. In textiles, people need to see the patterns in the fabric.

Logistic challenges

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, agrees that the current crisis poses major logistical challenges.

To maintain their workforce, workers often have to stay inside the factory to avoid outside infections, so they must be fed and housed on site.

Every worker must be regularly tested for Covid-19. “Arranging for all this in-house workforce is a very big task. Factories are operating at an average efficiency of 50%,” he says.

Each factory has workers who stay on campus, with companies needing special passes for external labor to be brought inside their factories.

Such disruption will inevitably affect production and deliveries, Lahoti says.

“There will be losses”, even if clothing and textile customers are kept informed. “Anyone who can take delayed shipments accepts them and those who can’t cancel.”

“Shipping companies have increased their transport costs and the number of ships has been reduced. Container availability is also getting very low. It is also a very big challenge for exporters,” says Lahoti.

Different lock rules

A logistical problem is that each Indian state has introduced different lockdown regulations.

Chandrima Chatterjee, current compliance, economics and advisory director at the Apparel Export Promotion Council, says most garment and textile factories have “been able to continue production”.

She says exports from key states such as Tamil Nadu, Maharashtra and Rajasthan are expected to continue. “It’s not the scenario of last year,” when the export trade stopped, she said.

While the capital Delhi is closed until May 3, garment factories in the Indian state of Karnataka have been allowed to operate with 50% of their workforce during its current two-week shutdown.

The state entered lockdown on Tuesday, April 27, with an official order stating that all social, political, sporting, entertainment, academic, cultural, religious, and other gatherings and congregations are prohibited and that religious places will remain closed to the public. until May 12.

According to local reports, all industries, industrial establishments and production units related to garment manufacturing are allowed to operate provided they adhere to proper Covid behavior.

In a statement posted on AEPC’s LinkedIn page yesterday (April 28), Chairman of the Apparel Export Promotion Council (AEPC), A Sakthivel, thanked Minister of Textiles Smriti Zubin Irani and Yediyurappa for enabling clothing manufacturing units to operate as requested.

“The garment export units are labor intensive and most of them are migrants from other states. Closing the factories would have made it difficult for them to return. failure to deliver export orders to foreign buyers, loss of credibility and a significant reduction in export earnings.

“Most garment manufacturing units also manufacture medical textiles, PPE kits and masks for domestic and international markets,” he noted.

According to credit rating agency ICRA, part of Moody’s Investors Services, India’s apparel sector may not experience a full recovery to pre-Covid levels until 2023.

With additional reporting by Beth Wright.

Michael O. Stutler