prpri Impact of Covid-19 on Textile And Apparel Industry Impact of Covid-19 on Textile And Apparel Industry

Introduction: India’s textiles sector is one of the oldest industries in Indian economy dating back several centuries. India’s overall textile exports during FY 2017-18 stood at US$ 39.2 billion in FY18 and stood at US$ 38.70 billion in FY19 and is expected to increase to US$ 82.00 billion by 2021..The Indian textiles industry is extremely varied, with the hand-spun and hand-woven textiles sectors at one end of the spectrum, while the capital-intensive sophisticated mills sector at the other end of the spectrum. The de centralized power looms/ hosiery and knitting sector form the largest component of the textiles sector. The close linkage of the textile industry to agriculture (for raw materials such as cotton) and the ancient culture and traditions of the country in terms of textiles make the Indian textiles sector unique in comparison to the industries of other countries. The Indian textile industry has the capacity to produce a wide variety of products suitable to different market segments, both within India and across the world. 

Contributor to GDP , Provider of Employment and Inflow of FDI: This sector contributes 2 % of GDP and employees more than 45 millions in 2018-19. The total inflow of FDI equity in this segment is very low at .75 per cent (April 2000 – December 2019). The main export market for textile and apparel for Indian manufacturers is U.S., U.K., Canada, Russia, U.A.E, Italy.The source for import of cotton  is Bangladesh and China

Sub Sector of Industry : The sub sector of this industry and the impact of covid 19 on this sub sector will go a long way in projecting the overall impact of COVID 19 on Textile and Apparel industry 

√ Cotton fibre: Cotton prices are expected to take a hit after the lock down as the local labor will take some time to return to work , may be 6 to 9 months to see the things to come on track. 

√ Man-made fibre: Since India imports MMF fibre from China and China has faced a lock down from December 2019 or early January 2020, which will result in shortage of this material . With Chinese production lockdown, the imports of MMF fibre would be impacted, prices of imported MMF used for high value products is expected to rise by 30 to 35 % per cent over the next three quarters (April 2020 to December 2020)

√ Yarn: The trade of yarn is big contributor in the whole over trade of India’s textile trade .Yarn accounts for 29 to 30 % per cent of India’s textile trade. With a decline in demand in both global and domestic market, the yarn production is expected to contract by 14-15 per cent over the next three quarters.

√ Fabric: With a decline in demand in both global and domestic market, fabric production is expected to decrease and over the next 3 quarters we may see a stagnation in apparel/home textiles production

Domestic factors :The factors impacting the Textile and Apparel market after COVID 19 on domestic front can be analysised as

1) Production & Labour : The textile industry is one of the top & largest employers in the country, employing over 45 million and  equally large numbers of contract labourers as well. These uncertain nationwide lockdown has led to temporary closures of factories . After 20 days of lockdown , most of the temporay labours were asked to go and the lay- offs have already begun among other low- wage worker also . This production loss and the return of labor will take some time to bring back the normalacy in this industry .

2) Prices of key RM: The prices of key domestic raw material may not seen a significant spike in their prices, but the prices of imported material may see a spike as each country will be protective in international trade . Depending upon the period of lockdown, demand shall be impacted.

3) Import issues : In the case of purified terephthalic acid (PTA) and polyester staple fibre ,China is one of the largest trading partner with India . Since the lockdown the import of this material has impacted the industry badly , and the impact may be high and may continue for 3 to 6 months

4) Cash Flow Issues: Due to import issues, price variation of key Raw material decline in yarn exports, & cheaper imports, etc.has hit the cash flow of the industry  These issues only look to get aggravated further with the current crisis.

5) Supply Chain Disruption: tIf the current scenario persists over the next few months, the domestic retail market would also be impacted significantly 
,employment would be impacted owing to limited demand in both domestic and international market

The textile and apparel sector production is expected to decline by 10-12 per cent in the April – September period.

Support from Government: After the lockdown in order to revive the  textile industry , the govt of India should provide the following relaxation in

  • Tax and compliances: Tax compliances deadline needs to be extended considering the nationwide lockdown and taxes need to be reviewed to minimise the impact of decline in demand.
  • Easing financial stress: The sector has been reeling under severe financial stress, so interest rate reduction should be considered.
  • MSME : Credit ratings based loan facilitation for MSME players need to be reviewed in order to make the sector competitive/lucrative
  • Support for end customer: Tax reliefs need to be provided, thus boosting consumer spending

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  1. Jumac Manufacturing says:

    Actually, the Indian textiles sector has been one of the worst hit sectors due to the COVID-19 crisis. In the context of its socio-economic primacy for the Indian economy, which is second only to agriculture, the industry must be given sufficient attention in academic and policy circles.

  2. sanjeevnanda says:

    Malls and retail outlets are being prodded by the stick of the pandemic. So many businesses being crushed for lock-down purposes. I’m imagining there would be an influx of folks rushing to buy new apparel as soon as the quarantine is lifted – only to content with the fashion of two seasons ago.
    ~Sanjeev Nanda

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July 2021