The CUTS Centre for Competition, Investment and Economic Regulation (CUTS-CCIER) published a report ‘Hanging by a thread- What lies ahead for Indian textiles and apparel industry post COVID-19?’ explaining the position of the textile and apparel industry before and after COVID19. Before getting into the specifics of the report, let us take a quick peek into the industry pre-COVID19.
The Textile and Apparel industry of India is the second leading industry of the country after agriculture. The industry contributes to 2% of India’s GDP and to 7% of the industrial output. After China, India is the largest manufacturer and exporter of textiles and apparel. India and China contribute to 16% of the global market. According to a report, it was estimated that by 2025, the Indian market would grow at a very fast rate. Since 2005, India’s export of apparel has gone up by 10%. India’s imports have also gone by 8% since 2005. Fabric was imported the highest by India. 2005 is a significant year in the T&A calendar as it was the year that the Multi Fibre Agreement came to an end. This agreement imposed quotas on the amount that a developing country could export to a developed country. This proved to be a boon and bane- a boon because the developing countries could now expand their exports, and bane because the imposition on quotas will no longer guarantee markets and the competition within domestic markets will increase. Many schemes by the Indian government such as the TUFS, SITP have been implemented to facilitate new and advanced state-of-the-art infrastructure facilities to help set up textile units. The imposition of the anti-dumping duty on imports especially from Vietnam had proven to be beneficial to the industry. Dumping refers to exporting of a product by a company at a lower price than it is sold in its own country. This threatens the local businesses and markets in the country and thus they impose strict duties on the product that they believe are being dumped into their markets.
India is looked at as a cost-competitive manufacturing base for many different products across the textile value chain. Many buyers are looking at India as the next better alternative to China as India provides a larger domestic market, better compliances and political stability. There is one advantage that India lacks compared to many other countries, which is India does not have duty-free access to major markets like the EU and the USA. The EU market has been India’s largest market for both textiles and apparel. However, there has been a slight decrease in export in the past 5 years. India’s import of fabric and apparel has increased in recent years. Flax, non-wovens and specialty textiles are the most commonly imported products. India wholly depends on Belgium and France for flax fibre. India’s second largest market is the US. Almost 25% of the USA's imports are from India. We have also been importing a lot of fibre from the States. American Cotton imports account to 98% of the total fibre imports from the USA.
India produces around 9500 million kilograms of fibre every year. However, the rate of production has been stagnant for the past 5 years. Cotton exports have reduced by 20 percent in the past 5-6 years.
The T&A industry provides employment to almost 45 million people, the industry being the second-highest employer after agriculture. The South-Indian states are the major manufacturing hubs of the country with Tamil Nadu contributing the maximum in terms of weaving, spinning and knitted apparel capability. With an increase in the number of manufacturing units in the south in cities like Tiruppur, Salem, Kanchi, Dindigul and Coimbatore, there was a shortage of the number of employees. The Southern Indian Mills Association initiated recruitments and also contacted the Labour and Employment departments of other states to source human resources from there. The Government of Tripura along with Southern India Mills Association organised a job fair to which almost 4000 unemployed workers came forward and applied.
This was the status of the T&A industry before COVID19 struck the globe. The whole world is grappling with the virus that has jolted every country. The nationwide lockdown has put manufacturing on hold with many factories temporarily shut. This has also led to the layoffs of many low wage workers. With the USA and the EU being the largest importers of Indian textiles and apparels, accounting for almost 60% of the export market, there have been many order cancellations, deferrals of orders which has led to the build up of the inventory. It has also affected the domestic market with none of the retail showrooms open. If the garment industry was to shut down for a very long time, it would affect a large range of people who are employed in retail to the ones employed in making a zipper.
The report by CUTS-CCIER as mentioned at the beginning of this article said that in Tirupur which happens to be the textile hub of the country has succumbed to a loss of 10,000 crores and has also 6000 crores of payments that are due. To get through these tough situations, the Government must provide subsidies and extend moratoriums on loans. The clothing and manufacturing association of India estimated that around 1 crore jobs would be lost due to the COVID lockdown. Yarn exports have fallen to a great extent, almost 30% between the months of March and April.
Many experts are of the view that this situation will remain the same even after the lockdown comes to end. The lockdown ended with a few relaxations set in place on the 8th of June, following which malls and showrooms were open. Officials have been taking the utmost care to protect those few shoppers who have decided to venture out. Many designers say that they hardly see 10 customers a day. Tarun Tahiliani said that globally no one is even thinking of buying clothes. He added that they will be able to sustain without sales for a maximum of two or three months beyond which it will be difficult as the economy is unlike the western economy which can afford to pay salaries to their employees and sustain their businesses.
The months of March, April and May marked the wedding season in India. This meant bustling streets with crowds flocking at designer boutiques, saree houses, and jewellery shops. With COVID positive cases emerging in the country, the streets have become very silent. Mumbai designer Nachiket said that priorities of people lie in essential goods and food rather than shopping for new clothes. Also with the lockdown in place and having nowhere to go, people don’t find the need to shop. Even if showrooms are open, there might also be hesitation in customers to touch and feel the fabric and would feel very jittery as to who might have touched the cloth before. Only through thorough sanitising, the brands can regain trust in the customers and increase sales.
Designers are also of the opinion that western apparel might go out of fashion but Indian apparel, like the Kanchi pattu sarees that South Indian brides absolutely adore, will not. However, with the pile up of these garments, the weavers might not get further orders.
Even in the darkest of times, one must know when to switch on the light. Tirupur has taken up this thought and has been manufacturing millions of masks. Nearly hundreds of factories have produced fifty thousand masks a day with the help of 2000 machines. This has helped in the retainment of employment of many workers.
There is a possible scenario that suggests that China may lose its place in the global market. This opportunity must be grabbed by India and increase its manufacturing. Also, brands will start looking out for alternative manufacturing hubs like India, Vietnam, Cambodia and Bangladesh. India has to gear itself for the fight against this pandemic and must better their efficiencies. This will enable it to work better and faster in a short amount of time. Brands must pay close attention to the buyers needs and must implement it, this will ensure the regaining of the buyers trust. Planning for the future, as in designing clothes for 2021’s spring or summer might be a good option considering the time customers might take to go out and shop. Every cloud has a silver lining and this might be it for the T&A industry of India.
- Hanging by a thread- What lies ahead for Indian textiles and apparel industry post COVID-19? - CUTS-CCIER
- Annual Report on Indian Textile and Apparel Industry- Wazir Advisors
- Export quotas and policy constraints in the Indian textile and garment industries- Sanjay Kathuria, Anjali Bharadwaj
- Fashion in the time of COVID-19: Indian designers share their strategies to stay afloat
- Impact of COVID-19 Scenario on European and the US Apparel Market- Wazir Advisors