Domestic manufacturers of the labour-intensive textile sector have expressed fear of job loss if the sharp decline in exports of textile products from India continues. Exports of cotton yarn and handloom products registered a 40 percent slump in September to $767.50 mn compared to $1,310.49 mn last year.
Due to rising input costs and weak demand — both in the domestic and foreign market — textile hubs in Surat and Andhra Pradesh have cut short the number of working days sparking fears of job loss in one of India’s largest employment-generating sectors. Queries sent to the Ministry of commerce and industry & textile ministry recently remained unanswered till press time.
The textile hub in Tiruppur which is home to nearly 6 lakh semi-skilled textile workers is the hardest hit as it is dependent on the demand from the US and European market, said Raja M Shanmugam former president of the Tirupur Exporters‘ Association (TEA).
“Right now there are not enough orders to employ the entire workforce who are dependent on textile manufacturing units in Tiruppur. So instead of running for 6 or 7 days a week, units are operating for 4 to 5 days a week so that at least everyone is employed and at least survival is ensured. If the war continues and demand slows down further, the number of operating days will fall further,” Shanmugam added.
Demand from both the western markets are down by almost 50 percent down and large companies such as H&M, GAP, Tommy Hilfiger are placing sharply lower order despite the peak season and Tirupur houses MSME units and the labour intensive industry could soon be forced to cut jobs, Shanmugam rued.
“There used to be an apparel business of about Rs. 16,000 cr in the Diwali season alone. This time around, it has not even touched Rs. 8,000 cr. The industry would wait for the festive season to get a boost but ever since covid-19 the demand has never really revived,” Champala Bothra, General Secretary, Federation of Surat Textile Traders Association told Mint.
There are structural issues at play for small textile manufacturers, demand is not the only concern at the moment, Bothra said, adding that large traders are refusing to work with medium-scale enterprises because of Input tax credit (ITC) related concerns.
“Export has slowed sharply. The numbers that you see are yarn export numbers, if you look into the actual export of clothes, the numbers are much worse. Exports of finished goods have suffered more. Ever since e-commerce/ online sales rose, small manufacturers are getting marginalized,” Bothra added.
Chandrima Chatterjee, Secretary General of the Confederation of Indian Textile Industry (CITI), warned that the slump in the western market is going to impact everyone and apparel would be the first to take the hit.
“Our export market share in Europe and the US is about 55 percent and we will always rely on exports to the western market. If the upcoming trade numbers in the month of October also show a decline, we would have officially entered a difficult situation,” Chatterjee added.
She further explained that October to March is a good period for garments with regard to the seasons that we operate. Chatterjee opined that India’s domestic demand remains in a much better position.
“From December onwards textile exports could jump because generally in August-September, the volume comes down. And there was pent-up demand so the apparel sector was on a higher base. Demand in western countries is also slowing but we are not in the luxury segment of exports. So hopefully it should not affect us much,” said Ajay Sahai, Director-General and CEO of FIEO.
Textile sales have always slowed during recessionary trends because people tend to pause buying clothes unlike other everyday use items and currently global cues are disturbing and after covid-19, recovery could not really happen, said Vijay Kalantri, President, of All India Association of Industries (AIAI).
“Demand slowdown in the west will have a very adverse impact on the domestic market. For now, the purchasing power in the domestic market is intact. Job loss is a possibility but hopefully, things will stabilize. It is good time for capacity building,” Kalantri added.