Garment exporters have started seeing the revival of demand, which in turn has increased capacity utilisation to around 60-80%.
After witnessing a sharp decline since April, India’s readymade garment exports are on a road to revival. In April, exports dropped by around 91.04% in dollar terms, and in August, the fall was 14%. In April, exports fell to US$ 126 million, compared to US$ 1.409 billion in April 2019. In August, exports stood at US$ 1.084 billion, compared to US$ 1.260 billion in the corresponding month of the previous year. Recovery was largely driven by the European Union (EU) markets. With garments seeing demand revival, capacity utilisation has increased to 60-80%.
Companies said customers are placing new orders based on the season. Moreover, stores are have opened up globally. E-commerce is also picking up. They expect growth to return by early next year. The development comes months after shipments were kept on hold by international customers due to lockdown imposed in their respective countries. This led to revenue loss during the lockdown period. But now, they have started witnessing significant recovery in the order flow, compared to May.
Raja N Shanmugam, president of the Tirupur Exporters’ Association, said enquiry levels are more than last year’s. Brands are now looking for alternatives to China.
SP Apparels, one of the leading exporters in the country, said all the factories are operating around 60% capacity due to social distancing norms imposed by the authorities. The company managed to address labour shortage by providing migrant workers with accommodation and food in the hostel premises. Those who had gone have also started returning while the return of some others has been hampered due to transportation issues.
On the Covid-19 impact, the company said, besides the order flow, the rupee depreciated significantly in the fourth quarter, compared to last year’s. This impacted the company’s hedged positions and resulted in hedging losses. Loss of revenue due to the pandemic is expected to impact hedges and may see an impact in the first and second quarters also.
Rahul Mehta, chief mentor at The Clothing Manufacturers Association of India, had said, “Most of the cancelled orders are being reinstated to start with, and new enquiries are also being received. Most of the European as well as US buyers are talking to exporters. Discussions have started about the ability to supply.”