Shipments worth $3bn at stake for Indian apparel exporters

17 Apr '20

3 min read

Graph: Rajesh Bheda Consulting

The findings are from the RBC survey titled ‘Measuring Impact of Corona Pandemic on Indian apparel export industry’.

The impact of the COVID-19 pandemic on business is unfathomable as of now, but the total business impacted so far can be estimated at $3 billion, according to the findings of a survey released Friday.

The key results of the survey, the first for Indian apparel sector, conducted by the Rajesh Bheda Consulting (RBC) are:
• The combined value of orders cancelled and on hold is $1.49 million per respondent factory;
• For 56% respondents, payments were delayed, whereas in 19% cases, customers refused to pay for the orders;
• Out of the cancelled orders in 22% cases, the buyer had paid for the material, in 35% cases partial payment for the material was received, and in remaining 43% cases no payments were received.

Outlining the context, RBC said that in the case of Bangladesh, the data on order cancellations and orders on hold was collected and publicised with promptness by the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), which helped stakeholders to communicate with international buyers on the numbers. As of April 13, orders worth $3.15 billion were cancelled or put on hold in that country, affecting the lives of 2.26 million workers.

In absence of similar data in India, RBC decided to undertake a quick survey to understand the gravity of the situation. The survey was announced on April 2. In all, 77 apparel exporting organisations from different manufacturing hubs of the country responded.

Of these, 60 responses were usable. Though the results are based on a relatively small sample, these do provide some much-needed data reflecting the scale of the challenge, as experienced by the respondents and its potential impact on the industry, RBC said in a statement. RBC is a management consultancy organisation focussed on improving the competitiveness of fashion industry entities.

Extrapolating the results of the survey at the apparel export industry level, this could result in export orders worth $4.17 billion being cancelled or put on hold. This amounts to almost 25% of the annual apparel exports from the country. Since the Indian industry mainly executes spring-summer orders, January-March months are the peak production months, and hence the impact is severe.

"Even if one considers the fact that participant factories are likely to be larger; the results need to be moderated. The total business impacted can be estimated at $3 billion. As a result, the apparel exporter community of India is likely to face unprecedented liquidity challenges and the livelihood of millions of workers is at stake," the organisation said.

RBC has been partnering with leading apparel manufacturers, retailers, industry associations, government departments and UN/ global development agencies with special focus on livelihood programmes, skill development, performance enhancement and poverty reduction.

Fibre2Fashion News Desk (WE)

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