With growing cases of COVID-19 across the country, yet again Indian apparel industry has started facing lot of challenges. Owing to various curbs to control COVID-19, majority of apparel manufacturers across various hubs are working with around 30 to 40 per cent capacity. With forced closure of non-essential stores in several states, apparel manufacturers could be staring at delayed orders yet again. A report by brokerage firm Motilal Oswal tracking the business of malls, apparel retailers, as well as apparel manufacturers, paints a grim picture for the manufacturing sector whose business is directly dependent on stocks moving at large retailers. Prior to this, a report of Icra Ratings had also said that the full recovery for Indian apparel players will be prolonged and pushed back to the financial year 2023 amidst rising COVID cases in India and some of the key export markets. As pandemic lowered the demand for formalwear and subsequent lockdowns meant an inventory pile-up with retailers, garment manufacturers have faced a cut in orders both from domestic and export markets. The report says that a large proportion of smaller players are closing down their businesses, plagued by an uncertain outlook, stretched working capital and liquidity, and rising raw material costs. Around 80 per cent of the apparel manufacturing sector remains largely unorganised and is highly dependent on cash and credit, which means smaller players are the first to get impacted with state-level closures. “Retailers were operating at sales of 70–80 per cent pre-covid levels over January–Feb’21. However, the industry has once again been put on the back foot due to fresh lockdowns being imposed; the impact from the second wave could be more severe given the already weak condition of many players,” the report says. Along with the high price of raw material for manufacturers, a high credit period remains a concern.
