The Indian apparel industry could take a hit of almost Rs 1 lakh crore due to the lockdown to contain the Covid-19 outbreak and a significant slowdown is expected in economic growth once the lockdown ends, according to a survey by the Clothing Manufacturers Association of India (CMAI), which concluded that almost 50 lakh jobs in the apparel industry are at risk. Almost a crore jobs may be lost in the textile and apparel industries, the survey estimated.
Out of nearly 4,000 CMAI members, more than 1,500 with annual sales of about Rs 60,000 crore and employing 400,000 plus people, reported a possibility of more than 40 per cent drop in demand after the lockdown.
Despite government measures, the apparel industry, especially its members from the micro, small and medium enterprises (MSME) sector that constitute 90 per cent of the industry, needs more support, the survey found. Wage subsidy and working capital support for the long working capital cycle is the need of the hour.
Eighty per cent of the respondents indicated the need to downsize their organisation immediately. A minimum 30 per cent reduction in employee count and about 20 per cent reduction in salaries for all employees is the action that CMAI members are likely to take to ensure survival after the lockdown, the survey found.
Ninety per cent of the members expect a 30-40 per cent increase in inventory due to zero sales during the lockdown. All companies are worried about collection from trade post the lockdown. A quarter of the collections may become bad debts and members expect a minimum 90 days additional delay in collections. The choking of working capital will lead to a delay in reviving factories, and therefore, three-fourths of the respondents expect normalcy in the market only in fiscal 2021-22.
A fifth of the respondents indicated they may consider closing down their business as they will not have the required additional resources to pay for costs during lockdown and the inevitable slowdown in the economy.