The closure of apparel retail shops and shopping malls has dealt the heaviest blow to the apparel industry
The apparel retail and manufacturing segment is staring at another round of job losses in the wake of the lockdowns imposed by several state governments to contain the rapid spread of the COVID-19 pandemic.
“About 20-25 percent jobs were lost last year due to the lockdown, of which around 10-15 percent had found alternate employment. We can see a similar situation arise this year depending on how long the lockdowns last,” says Rajesh Masand, President, Clothing Manufacturers Association of India (CMAI).
According to CMAI, the apparel manufacturing and retail segment employs about 12 million people, of which, around 1.3 million are in Maharashtra. The closure of retail outlets has impacted the industry severely, which was yet to recover from the last year’s blow. About 6 million migrant labour are dependent on the industry for their livelihood.
“About 60-70 percent of manufacturing units, which are not producing for exports have been forced to shut down due to cancellation of orders or manpower challenges,” adds Masand.
There are about 80,000 factories manufacturing apparel in India, as per CMAI. The lockdown in Maharashtra has particularly hit the industry as 18,000 units are located in the state and 10,000 in Mumbai itself, shows the data from CMAI.
The Maharashtra government has allowed the manufacturing units to open on the condition that the workers inhabit the premises, informs Masand, and since most units do not have this facility, they had to cease operations. The exodus of migrant population has also been witnessed and is impacting the production though not to the extent seen last year. However, the state has allowed the production for exports; Karnataka, on the other hand, has restricted manufacturing for export too.
The closure of apparel retail shops and shopping malls, however, has dealt the heaviest blow to the apparel industry. According to industry estimates, the retail segment had reached 80-90 percent of its pre-COVID levels in January and February but came to a grinding halt again with the new set of restrictions.
According to the CMAI president, the apparel manufacturing segment will take time to recover as even after the restrictions ease, the retailers will initially keep an eye on the situation before placing new orders.
On April 27, the Retailers Association of India (RAI), too, urged the government for timely intervention given the dire state of the retail industry as about 80 percent of shops are closed due to the pandemic-induced lockdown.
The association said that this could risk three million jobs. It also asked for an extension of the benefits of the emergency credit line guarantee scheme to retail companies, too, and requested the Reserve Bank of India (RBI) to instruct banks to increase the working capital limit for retailers by 30 percent.
“Retail sector represents an investment of Rs 2,50,000 crore and almost Rs 75,000 crore could turn NPA if urgent measures to ease the working capital challenges are not taken,” it said.
Apart from various relief efforts required to tide over the COVID situation, the industry body has requested the government and the RBI to announce a moratorium on principal and interest for six months for the 26 stressed sectors. As the second wave hits the industry, the clarion call to re-introduce moratorium on servicing debt for COVID relief returns as a big ask.