Massive 84% dip in textile sales, finds study

The apparel sales have plummeted to a historic low of 84% because of the Covid-19 pandemic and the lockdown imposed in late March to check its spread, a Clothes Manufacturing Association of India (CMAI) survey of around 1,000 factories has found. Only 22% of the factories were functioning by the May end while 40% of them manufactured personal protection equipment (PPE). Over 83% of the factories surveyed with global marketing research firm’s AC Nielson’s help reported sales of under 5% sales in May compared to the same month last year.

Rahul Mehta, the chief mentor of CMAI, cited the survey and said the apparel market was worth ₹6.5 lakh crore in 2019 and they estimate it to shrink by 15% this year to around 5.85 lakh crores. He added in the April-June quarter, most brands and retailers would be unable to achieve over 15- 20% of their 2019 first-quarter sales.

Mehta said the industry, which contributes 4 to 5% to India’s GDP, employs close to 12 million people. “It is our estimate that approximately 50% of the labour force is migratory,” Mehta said.

Union textile ministry officials said the demand was at an all-time low with even the government was unable to sell its own stock.

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A textile ministry official said there is no demand right now. “Only 10% of the stock has been sold in the last 15 days. The export market is dwindling as well. Luxury products are not selling.”

The official said the ministry has not conducted any assessment of the losses but added stocks were piling up at mills even as the Centre on May 30 released details of the first of a three-phase plan--Unlock 1.0--to lift stringent restrictions imposed to stop the Covid-19 spread.

The official said National Textile Corporation Limited, under the ministry, has a stock worth ₹130 crore but no takers. “ ₹70 crore worth raw material is also lying unused.”

The official said mills are unable to dispense with the stocks because the “market is at a stalemate”. “This may change by July. There are sectors that are worst hit like construction... Right now people are not spending money, but that will change.”

Indian Technical Textile Association chairman Dr Sundaram said the Centre’s order for 20.2 million PPE kits has helped some offset huge loses. “At ₹635 for a [PPE] suit, the order for 2.2 core [20.2 million], has pumped [Rs] 1,400 crore into the sector over the last three months.” He added this is nothing compared to the overall losses.

South India Mills Association secretary-general K Selvaraju said the industry lost about 5,500 crore daily during the lockdown and the road ahead does not look easy.

That nearly 70% of the workers employed in the industry are migrants has added to its woes as the lockdown led to their massive exodus from cities.

Selvaraju said there will be at least 30 to 50% fall in consumption. “Most migrants have returned home and will only be back after the monsoon. It is likely that a semblance of normalcy will return to the industry in September...”

Former Confederation of Indian Textile Industry (CITI) secretary-general D K Nair said there will at least 50% revenue loss and restarting the industry will be especially tough. He said the business would only get tougher if the number of Covid-19 cases in Mumbai, Chennai and Delhi do not reduce. “They are the main trading centres and right now, they are [Covid-19] hotspots. Nothing is moving there,” said Selvaraju. “Production across the industry, whether it is in spinning, garments, yarn, has come to standstill.” Selvaraju said exports make up for 30% of the revenue and most orders have been cancelled or deferred

Nair said the export demand is likely to fall further as the largest exporter, the US, is also facing anti-racism protests along with the pandemic. He added the US and Europe account for 60% of exports from India.

CITI has written to Indian Banks Association and sought a series of measures, including an extension to the moratorium on repayment of term loans until March 31, 2021, to help the industry.

Nair said many would be unable to tide over the revenue dip as medium or small scale enterprises account for 80% of the industry.