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India's textile industry reeling under COVID-19 impact

Date: 08-04-2020
Subject: India's textile industry reeling under COVID-19 impact
Laxmi, who works in residential societies in East Delhi, is clueless how loss of one person's income will play out for her family.

"Mujhe to lagbhag sab ne iss mahine ka pagar diya hain. Lekin mere pati ko koi paisa nahi aaya. Karkhana bhi bandh ho gaya, pata nahi kab khulega. Bohot mushkil ho rahi hain chalana (I have been paid this month's salary by most of my employers. But my husband has got no money. The factory is also shut, don't know when will it open. It's very difficult to run the house)," she said.

Like million others in India, Laxmi's husband was employed in the textile sector. But a nationwide 21-day lockdown to contain the pandemic has resulted in unprecedented chaos in this sector.

After agriculture, India's textile sector is considered to be the next biggest employment generator in the country. It employs over 105 million people.

The pandemic came at a time when the sector was battling sluggish growth.

"We have wafer thin margins in this business and global implications will affect India. Exports otherwise also for a couple of years now have stagnated at around $37 billion," a senior official working closely with the sector told Moneycontrol on condition of anonymity.

Eleven countries buy 41 percent of India's cotton yarn exports and these countries have reported COVID-19 cases, according to the Cotton Textiles Export Promotion Council (Texprocil)

In value terms, yarn exports are down 30 percent in January-February against a year ago. Cotton yarn exports to China, Iran, Korea and Vietnam have seen a steep decline.

The US and the Europe are the two largest markets for Indian textile exporters. Both are imploding with new cases everyday. The pandemic has killed more than 50,000 people worldwide, with nearly three-quarters of the deaths being reported in Europe. US has reported over 10,000 deaths.

UK has announced a six-month lockdown while most of USA has social distancing and quarantine measures, with stay-at-home orders for more than a third of the population.

The pandemic has already led to big fashion labels announcing cancellation of orders and relieving labour. Macy's, the US-based retail giant, has announced that it would grant leave to most of its 1,30,000 employees. British luxury giant Burberry have predicted a steep drop in sales of about 70-80 percent. The UK-based retailer Primark has cancelled all new orders and Inditex (the owner of popular brand Zara) has written off some $336 million worth of inventory.

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"The spread of the virus in China and which later got spread to EU and USA has majorly impacted us as they are huge markets for Indian textile products," said T Rajkumar, Chairman, Confederation of Indian Textile Industry (CITI).

The government's directions to close all the malls and retail outlets to tackle the outbreak has resulted in the substantial reduction in the sales of the domestic textiles and clothing.

"Until and unless we give some stimulus package to the industry, we won't be able to withstand this particular ill effect of COVID-19. We have sent presentation to the finance ministry to give us economic package because on the one side government is asking to pay salaries and all but there is no production happening and many of the migrant workers have gone back hence," said the official quoted above.

Countries across the world have extended support packages to tide over the crisis. Germany has announced a financial package of half trillion Euros for companies impacted by the crisis to boost their liquidity.

"Under this scheme, any German company hit during this crisis can borrow as much as necessary by them for a longer duration with zero interest rate till such time they completely recover; they do not have to pay back," said Rajkumar.

Source:- moneycontrol.com

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