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March 27, 2020

India lockdown of little impact as orders already cancelled

The three-week lockdown ordered by the Indian government from Wednesday (25 March) to contain the spread of the coronavirus will have a limited impact on apparel exporters because production is already largely halted by a wave of order cancellations.

The three-week lockdown ordered by the Indian government from Wednesday (25 March) to contain the spread of the coronavirus will have a limited impact on apparel exporters because production is already largely halted by a wave of order cancellations.

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“‘Don’t cut, don’t stitch, don’t ship, we will let you know,’ these were the orders from our buyers in Europe and the US,” Sudhir Dhingra, chairman and managing director of Gurgaon-based clothing manufacturer Orient Craft Ltd, told just-style.

Buyers are also not responding to payment queries and companies are already short of funds to pay monthly wages that will soon be due, adds HKL Magu, managing director of Delhi-based Jyoti Apparels. “There will be a hue and cry on that day as workers will not have money to buy even food.” 

Shortages of incoming funds will also impede clothing exporters’ capacity to pay suppliers of inputs such as fabrics and other raw materials, Rakesh Vaid, founder chairman of Delhi based Usha Fabs Pvt Ltd, and a former chairman of India’s Apparel Export Promotion Council (AEPC) told just-style. 

“The crisis is going to have a domino effect on the textile industry and the other ancillary industries as well,” he says.

Such uncertainty will also hinder companies’ ability to prepare for winter season orders, notes Chandrima Chatterjee, current director for compliance, economics and consultancy at the Apparel Export Promotion Council.

“After three or four months the preparation for the winter session will start and there will be a lot of change in the procurement requirements,” she says, warning that “industry has to plan at least 60 days in advance, but you can’t do anything until you have a clarity on the [Covid-19] situation.”

Dhingra says there is little chance of selling the finished products of cancelled export orders on the domestic market, especially as measurements and styling are for western customers.

“It is not that Indian stores are doing great, but even if they were, they don’t have the ability to take even five percent of the product,” he says. Dhingra hopes that buyers will honour their commitments: “You talk of social compliance – now it is your turn.”

Related Companies

Free Whitepaper
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What is the impact of China’s Zero-COVID lockdowns on economic activity, consumer goods and the foodservice industry?

While wanting to protect the country from being overwhelmed by Omicron, China’s adherence to a Zero-COVID policy is resulting in a significant economic downturn. COVID outbreaks in Shanghai, Beijing and many other Chinese cities will impact 2022’s economic growth as consumers and businesses experience rolling lockdowns, leading to a slowdown in domestic and international supply chains. China’s Zero-COVID policy is having a demonstrable impact on consumer-facing industries. Access GlobalData’s new whitepaper, China in 2022: the impact of China’s Zero-COVID lockdowns on economic activity, consumer goods and the foodservice industry, to examine the current situation in Shanghai and other cities in China, to better understand the worst-affected industry sectors, foodservice in particular, and to explore potential growth opportunities as China recovers. The white paper covers:
  • Which multinational companies have been affected?
  • What is the effect of lockdowns on foodservice?
  • What is the effect of lockdowns on Chinese ports?
  • Spotlight on Shanghai: what is the situation there?
  • How have Chinese consumers reacted?
  • How might the Chinese government react?
  • What are the potential growth opportunities?
by GlobalData
Enter your details here to receive your free Whitepaper.

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