COVID-19 is hitting every industry in the world. The Indian Apparel industry is being hit quite badly and this is bad news because it has a lot of labor involved in the production and supply chain. Apparel Export Promotion Council (AEPC) is saying that roughly 65% of payments of apparel exporters ($2 billion which is about Rs 15,300 crore) is blocked with the foreign buyers. They have not paid for 2-3 months of shipments now.
Hit hard by the economic fallout of the Covid-19, the Indian apparel industry looks poised for a slow death, and if the situation does not improve by May, many companies will be shuttered. (Source: covid-19: Covid-19 creates a massive $2 billion hole in India’s apparel industry – The Economic Times)
The lockdown across the geographies have led to the following issues:
- Foreign buyers are postponing orders,
- While asking for hefty discounts
- Goods in transit goods are not moving
- Those already dispatched are also finding no takers on various foreign ports
Buyers have been either canceling or postponing the shipments and these cancellations and postponement of shipments have resulted in packing credits getting eroded. One has to remember that in today’s world, apparel products are tailor-made, and are made per specific designs and fashion of the day. Because of that they are really perishable and they cannot be used the next year. With almost zero salvage value, the stocks on hand become redundant.