International buyers have already dumped orders, say factory owners

International buyers have already dumped orders, say factory owners

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.

"'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."