India's apparel sector appeals for financial stimulus package amid COVID-19 spread

Source: Xinhua| 2020-03-22 00:34:01|Editor: zyl
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by Pankaj Yadav

NEW DELHI, March 21 (Xinhua) -- As the COVID-19 hits globally, uncertainty looms large over India's garment manufacturing and exporting units amid large scale cancellation of import orders from various countries over the past couple of weeks.

Cartons containing readymade garments could be seen at these manufacturing units.

In present circumstances the Apparel Export Promotion Council (AEPC) on Saturday appealed to Prime Minister Narendra Modi for an immediate financial viable stimulus package for the reeling apparel sector.

In a statement, AEPC Chairman A. Sakthivel requested for urgent steps to ease the working capital constraint by easing the banking sector norms for packaging criteria, advances and repayment obligations, improving the insurance terms to reduce the pre and post shipment risk, easing of norms for meeting exporter's obligations and easing of labour compliances for this period.

In his statement, the AEPC chairman highlighted the severe cash flow crunch, rising inventories and shipments cancellations.

According to Sakthivel, the apparel sector had been one of the worst hit due to the COVID-19 as it was "deeply engaged" with the global value chain. "With Indian's top markets like U.S., Italy, Spain, Middle East etc. being hit by virus, 75 percent of Indians apparel exporters are now exposed to cancellation of orders and postponement of shipment," he added.

The prevailing uncertainty is expected to linger for at least next two months, impacting at least 1 billion U.S. dollars worth of shipments, Sakthivel further said in his statement.

Nearly 13 million direct workers and their families are said to be dependent on India's apparel sector.

Apparel manufacturers in Gurugram city in northern state of Haryana, adjoining Delhi, are said to be witnessing a sudden cancellation of orders from foreign countries. According to media reports, shipments ready for export were finding no takers as warehouses, logistic firms, markets and banks had shut operations in most pandemic-hit countries across Europe.

Chief Executive Officer of Gurugram-based garment unit "MM Creations" M. Gaind was quoted as saying "We have not been paid for shipments already dispatched. Usually the payment is received within a month. But since banks, clearing houses, and markets are shut, things have come to a standstill."

Gurugram is said to be a home of around 200 large export-oriented garment firms having a combined turnover of nearly 30,000 crore Indian Rupees (4.3 billion U.S. dollars) annually.