Hope for apparel exporters as US, Europe buyers place orders; shortage of workers, transport issues remain

KEY HIGHLIGHTS

• Garment exporters see revival of cancelled orders but buyers in US and Europe demand discounts

• Shortage of workers and curbs on inter-state movement of passenger vehicles hurting exporters

• Apparel Export Promotion Council of India (AEPC) has written to Uttar Pradesh and Haryana governments to ease transport restrictions

• Air freight charges for US have increased to $9 a kg from less than $1 earlier

Opening of lockdown in Europe and US is bringing cheers to apparel manufacturers back home as supply orders revive. But many firms complain curbs in inter-state movement of vehicles and shortage of workers are making it difficult to execute orders. Even though buyers in US and Europe are asking for discount in prices, the revival in demand is a big respite for garment firms. Peak demand season usually gets over in May but now that shops are finally opening in key markets, supply orders have been extended.

"Now that lockdown is being lifted there, they (buyers) are expecting sales. Our customers are now willing to revive the orders they had cancelled earlier and give some extended delivery window. But we are not able to commit to our customers as we are facing workers and logistics issues," said Animesh Saxena, General Secretary, Garment Exporters & Manufacturers Association.

Even as Home Ministry has relaxed lockdown rules and allowed states to decide on inter-state movement of passenger vehicles, many state governments have taken a cautious approach and are reluctant in permitting free flow of transport. While the move is aimed at containing the spread of coronavirus, restricted public transport and passenger vehicles are impacting movement of workers.

This has forced many factory-owners and garment mills to operate at a limited capacity ranging from 25% to 50%. Return of migrant workers to their home states has created massive shortage of manpower in industrial clusters and zones.

"Our clients have asked us how fast we can deliver. Some of the customers are ready to take delivery even without discount. But apart from local issues on the ground we have also seen air freight charges shooting to $9 a kg which was not even $1 earlier. We are facing many issues and garment exports are suffering heavily. We are not even operating with 20% of our capacity," said Lalit Gulati, Chairman, Modelama Exports which primarily supplies to clients in US.

As the coronavirus epidemic took European countries and the US in its grip, Indian apparel firms started seeing high rate of order cancellation. Foreign buyers either put the orders on hold or demanded deep discounts. This took heavy toll on Indian firms' cash flow and made future uncertain. Meanwhile, the local public health situation warranted shutting down of factories. But after nearly two months of lockdown, there's a ray of hope. The garment manufacturers are now trying to increase their operational capacity and urging government to ensure availability of workers.

"We have requested state governments to allow inter-state movement of workers to ease the situation. We have written to the Chief Ministers of Haryana and Uttar Pradesh and hope things to improve from next week," said A Sakthivel, Chairman of Apparel Export Promotion Council of India (AEPC).

Also read: Lockdown 4.0 Coronavirus Live Updates: Rail bookings to resume at service centres from Friday; cases-1.12 lakh

Also read: Government pushes MSMEs to produce PPEs, sanitisers for export