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Domestic apparel industry could take a hit of Rs 1 lakh crore due to lockdown: CMAI survey

An analysis of the first 1500 responses, indicates the significant crisis is brewing in the domestic garment industry. Only a comprehensive support package from government can cushion the potential collapse of the Industry.

, ET Bureau|
Last Updated: Mar 31, 2020, 03.00 PM IST
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80% of the members who participated in the survey have indicated that they will need to down-size their organisation immediately.
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Deeply concerned by the economic impact due to the lock down in the country caused by COVID-19 the Clothing Manufacturers Association of India (CMAI) conducted a survey amongst its members to get a sense of how the members were facing up to the current circumstances and how they were forecasting the period after lock-down is lifted. An analysis of the first 1500 responses, indicates the significant crisis is brewing in the domestic garment industry. Only a comprehensive support package from government can cushion the potential collapse of the Industry.

Several important measures have been announced by the Government, but it is clear that the industry, especially its MSME members which constitute 90% of the industry, needs more support. Wage subsidy and working capital support for the long working capital cycle is the need of the hour.

1500 plus CMAI Members with sales of about Rs. 60,000 crores and employing 400,000 plus people, have reported that there could be more than 40% drop in demand after the lockdown. Based on this, CMAI which has close to 4000 members primarily in the Domestic Branded Apparel Manufacturing, believes that the Domestic Apparel Industry could take a hit of almost Rs 1 lakh crore due to the lock down and the expected significant slow down in economic growth once the lock down is lifted.

The estimated drop in sales would mean that almost 50 lacs jobs in the Apparel Industry are at risk. With a global slow down, and the cascading effect on other sectors of the Textile Industry, almost 1 crores job may be lost in Textiles & Apparels alone.

80% of the members who participated in the survey have indicated that they will need to down-size their organisation immediately. A minimum 30% reduction in employee count and about 20% reduction in salaries for all continuing employees is the action that CMAI Members are likely to take to ensure survival after the lock down is lifted.

90% of the members expect 30-40% increase inventory due to Zero sales during the lock down. Further 100% of members are worried of collection from trade post the lock down. 25% of the collections may become bad-debts and members expected a minimum 90 days additional delay in collections. The choking of working capital, will lead to a delay in reviving factories and thus 75% of the members expect normalcy in the market only in FY 2021-22.

20% of the members, have indicated that they may consider closing down their business, as they will not have the required additional resources to pay for costs during lock down and the inevitable slowdown in the economy.

CMAI, has appealed to Hon Prime Minister, Ministry of Textile, Government of India, Finance Ministry, Government of India and various State Government to provide support to the Domestic Apparel Manufacturers to overcome the impact of lock-down and reduce the potential job loss.
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