The second wave has hit multiple sectors hard and one such segment that has borne the brunt of a changed lifestyle as people were forced to stay home again is the garment manufacturing industry. Hosiery and knitwear manufacturers around the country are still struggling to revive after the lockdown in the past three months.
KB Agarwala, Managing Director of Rupa says, “The major manufacturing hubs in Tamil Nadu and West Bengal are unable to get back to 100% production as there are still restrictions on local travel for workers to return. This has caused a demand supply gap currently.”
Supply is currently down by 50% of normal levels, adds Agarwala. While demand is slowly making a comeback and restrictions are being eased too, normalcy is still a little while away for the sector.
Raja Shanmugam, the President of the Tiruppur Exporters Association of Tamil Nadu says, “It may take two more months to get production back on track and bridge the domestic demand supply gap.”
Higher input costs too are adding to the woes of the manufacturers. Repeated hikes in yarn and cotton prices have led companies to take multiple rounds of increases in product prices. But, the total input costs have not been passed on and any further hikes will threaten the already slow sales.
“We cannot hike product prices any further as we are starting to see resistance from buyers at current prices, that is impacting overall demand,” explains Agarwala.
This is impacting margins at a time when sales are lower by 25% as compared to the same time last year. “We already function with wafer thin margins of 5-7%. As we cannot pass on input costs completely, manufacturers are now taking a 3-4% hit on these small margins,” says Shanmugam.
India has also been put on the back foot in comparison to competitor markets as an export hub for major global brands like Tommy Hilfiger, H&M, Marks & Spencer, Ralph Lauren etc who source mainly from Tiruppur.
Shanmugam explains, “The second wave has threatened our existence as competitor countries were functioning normally while we were under lockdown. Indian companies missed providing samples for two seasons to global players in the past two months, so the buyers sourced products from Bangladesh, Vietnam, Cambodia. We have lost out on orders for two upcoming seasons.”
The Tiruppur manufacturing hub has incurred a loss of at least Rs 10,000 crore and the West Bengal hub has seen a loss of 50% in the last few months.
But, there is hope on the domestic front as demand is expected to return based on the severity of a probable third wave. Vinod Kumar Gupta the Managing Director of Dollar Industries says, “We expect demand to steadily rise over the next few months as cases continue to fall. The hope is that production will return to normal by then to be able to cater to the demand.”
