The readymade garments industry, which is among the worst-hit sectors due to the Covid-19-induced lockdown, is staring at 30-35% sales loss at retail level for the current fiscal as the markets have not unlocked evenly across the country.
The retail sales of readymade garments stood at Rs 6.5 lakh crore in FY20. On the other hand, with just two months to go for the Diwali festival season, manufacturers of apparel are yet to receive sufficient orders from the retailers.
“The customers are not visiting the markets freely despite gradual unlock taking place across the country. The industry witnessed 80% drop in sales during the April-June quarter and we expect the drop in sales to be around 60% during the second quarter, primarily due to the beginning of festivals in August,” Rahul Mehta, Director, Creative Group of Companies said.
As a result, he estimates the loss of employment in the sector to be in the range of 25% or 3 million jobs this year. The sales during Diwali festival this year are expected to be around 50% of last year at the retail level. The sector employs around 12 million people.
“Normally, retailers place new orders with manufacturers a quarter before Diwali. But this time, the retailers are carrying 3-4 months of stocks with them. The fresh production is going to be minimal this year,” Mehta told DH.
Sakti Arrumugham, Director-Sales of Tiruppur-based Sakthi Heinrich Apparels said the company has been facing close to 50% drop in sales since the lockdown started. The company, which exports jersey for football clubs and cycling gear to Europe, has also seen 50-60% decline in its export orders. “We have laid off around 30% of our workers in one of our units in Tiruppur. If the situation does not improve in the coming months, it will be a grave situation," he said.
According to Harakchand Vora, Chairman, Vardhaman Fashions, the biggest challenge before apparel retailers is shortage of liquidity and credit. The industry needs to survive till March 2021 or else it will be wiped out. “We are already seeing 40% job loss in many units across the country. Especially, the self-employed karigars are in danger of getting wiped out from the industry,” he said.
Currently, the major hurdles before the readymade garments manufacturing industry are shortage of labour and delay in payments from the retailers. The workers from Bihar, Odisha and West Bengal are yet to return completely and only 60% of the pre-Covid levels are achieved, he said.
According to a woman CEO of a clothing company in Bengaluru, an estimated 40% jobs have been lost in the city. There are over 3,000 garment factories in Bengaluru. Among the small-scale units, 25-30% have shut shop already. “The major problems are lack of orders and payments for previous orders. Thousands of workers have shifted out of Bengaluru due to lockdown and are yet to come back,” she said.
Meanwhile, the Clothing Manufacturers Association of India (CMAI) is organising its annual National Garment Fair virtually from September 10 to 20.