Covid-19, according to the experts will Take the RMG, Fashion & Textile Industry back by almost 10 years and it is showing bleak future post lockdown which is already lifted and we are in unlock 1.0 to be ended by June 30th, 2020.
Governments, Industries and businesses are facing huge challenges due to Covid-19 Pandemic and almost all the industrial and business sectors of the economy are facing the brunt of this pandemic. COVID-19 impact on RMG, Fashion & Textile Industry has been felt more because of the fact that it is one of the biggest employment generators.
RMG manufacturers have not received and are not receiving any orders from domestic readymade garments and fashion retailers in May & June and we are not expecting any significant improvement in orders and business in July either. Hugh number of unsold inventories are lying with retailers and they are looking forward to liquidating their inventories in the next couple of months after that only they will be able to place new orders when the cash cycle will improve. Most of the fashion and RMG brands will be hoping to get rid of their unsold spring-summer collections until October 2020 without ordering fresh. RMG manufacturers believe that hundreds of thousand workers will lose their jobs and industries will be closed. Retailers would be cutting down fresh orders for Autumn-winter by more than 40-50%.
Since unlock 1.0 has started after more than two months, the overall sales figures are not encouraging at all. Clothing and RMG are seen as non-essential and buyers are very few and scarce. Due to fear of catching an infection while taking trials of clothes in the stores from the already tried clothes, shopping seems not going to be the first choice during the pandemic period and after lockdown lifted. Due to this reason for having few buyers, retailers are trimming down their staff. Schools and colleges are not open yet and we are not sure till when they are closed. Offices have started operating but employees are working from home. Socialising has taken a back seat, marriage ceremonies and social gatherings are allowed with fixed no. of attendees, so why people should buy clothes if you can’t show them off.
Due to Covid-19 impact on RMG, Fashion & Textile, the situation is very bad for the retail industry. Just to make the ends meet, the retailers need at least 60-70% sales.
After unlocking 1.0 started, the retailers were expecting to have sufficient footfall in the malls as well as in high streets at least around 50% in big cities and metros but the footfall is very poor and is around 25% of the numbers before Pandemic started and so does the sales (25% of the pre-COVID-19 level). That’s the reason the retailers/domestic the retail industry is not placing fresh orders.
Customers are afraid to go into retail stores, malls, and markets and with the poor business as compared to last year, they have nearly about 4 months stocks so manufacturers will not be getting fresh orders in near future impacting the industry negatively. This has been confirmed by the manufacturers also.
According to (RAI) - Retailers Association of India, RMG
and Fashion apparel business have declined by 70% YOY during June 1-15. And according to (CMAI) – Clothing Manufacturers Association of India, orders for
winter wear for the current fiscal year will be limited because of cash crunch with
retailers.
Covid-19 impact on RMG, Fashion & Textile- how much the industry will hit and what’s at stake?
It is going to be tough and difficult for Textile Industry to predict consumer behavior after the lockdown period and restrictions are lifted. RMG, fashion and textile industry are hanging by a thin thread, and the only way now is to how they can cut their costs and reduce the losses to keep floating.
There was a protest from workers a few days back outside a factory in Bengaluru, manufacturer of RMG for domestic retailers as well as for exports. There was the cancellation of the order from H&M followed by a refusal to pay for the job already completed. H & M has issued a positive statement to resolve the issue after discussions with the manufacturer and trade union.
A group of retailers has planned to have a meeting with the Finance Ministry to vouch for a financial package for suffering textile industry.
RMG and fashion retailers were ready in march with Spring-Summer collection but could not launch the fresh trends because of lockdown started. Their retailers have unsold clothing range inventory till October 2020 winter. The plan is to continue with the inventory until the end of 2020. This will lead to a drop in orders by 40% approximately compared to 2019.
The only hope for the manufacturers of RMG is to look and book for export markets. As per the information from industry sources, export orders have started to pick up in Tirupur (Tamil Nadu). According to the big textile industrial houses like Arvind, Exports will start moving up towards 65-70% of the original mark and will show stronger recovery by end of 3rd quarter 2020.
Major hurdles being faced by textile industry due to countrywide lockdown-
Employment & Labour: Employment for over 45 million people are provided directly by Apparels & Textile Industry. Due to countrywide lockdown, closure of factories and lay-offs have already begun.
Export of RMG and Imports of Raw Material: Pandemic will impact exports negatively primarily
and later the domestic market. Export orders for RMG will fall due to fewer orders
in the last quarter of 2020, working capital requirements and lack of clarity
on incentives and duties especially when exporters of Sri Lanka, Bangladesh and
Vietnam will get preferential treatment and access.
With no new store opening, lockdown, and existing stores have a lot of inventory, the domestic consumption will also be impacted. And if exporters will dump their stocks due to cash crunch and lack of orders, the domestic prices will be impacted negatively and the whole textile industry going to suffer.
The constraint of Cash Flow and Supply Chain: The apparel and textile sector has been struggling with the profitability issues due to cheaper imports and reduced volumes of yarn exports and grappling further with Pandemic. RMG manufacturers now need to see them for the opportunities provided locally.
The sentiment of Consumers-COVID-19 impact on RMG, Fashion & Textile:
Indian The apparel & textile industry is one of the most important and largest industrial sectors of the Indian economy. It contributes 2% of GDP, 7% of Industrial output and 15% of Export earnings.
To Minimize the impact, the government must immediately announce the relief for the Apparel, Fashion and textile industry to mitigate the crisis post-COVID-19 Spread because if the situation does not change towards positivity, it will directly affect the length of the recovery cycle.
According to the Chief of CMAI, if the garment industry suffers and closes down, there will be huge job losses and the entire value chain will be impacted from fabric to brand to the label industry. If the government will not do anything, we must be expecting a devastating loss of 10 million jobs. And most of the workers and employees do not have financial reserves to see them through 3-6 months of this pandemic.
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