India's garment exports are likely to decline by 30-35 per cent this financial year due to COVID-19 pandemic, which has rendered many people jobless in major export destinations, including the US and Europe, according to Crisil Research.
The US and the European Union, which together account for 64 per cent of India's readymade garment (RMG) exports, are staring at a recession, Crisil Research said in a report, adding that the US is the worst-infected country now, and the pandemic-driven lockdown has ripped many apparel retailers there.
Besides, a spike in unemployment and fall in personal incomes would cut spending on apparel, it said.
In March quarter, India's garment exports slipped 16 per cent, while the fall was a drastic 91 per cent in April, it said.
"We expect readymade garments exports to dive 30-35 per cent this fiscal," the report added.
Indian merchandise exports fell 13 per cent (in dollar terms) in the quarter ended March, and a steep 60 per cent in April as the COVID-19 pandemic and shutdown of national borders slammed global trade, it said.
Exports of textiles and cotton yarn, which were coming apart even before the pandemic struck because of competition from Vietnam, Chinese stock liquidation and lack of free trade pact support, have been shred, it added.
Meanwhile, India's yarn exports contracted 30 per cent in the quarter ended March, as imports by China, which accounts for a third of India's yarn exports, fell as garment units there shuttered.
Import of yarn by Bangladesh, which accounts for nearly a fifth of India's yarn exports, also declined, it added.
Overall, exports are estimated to have nosedived 80-90 per cent in April, and won't revive in a hurry.
Therefore, yarn exports are also expected to slide by 35-40 per cent this fiscal as compared to the previous year, Crisil Research said.