Industry Insights
Analysis of the survey
1. Drop In Sales: Demand for Apparels may
Shrink by Almost 40 per cent this year. More
than 1500 CMAI members with sales of
about R60,000 crores and employing more
than 4,00,000 people have reported that
there could be more than 40 per cent drop in
demand after the lockdown. Based on this,
CMAI which has close to 4000 members
primarily in the Domestic Branded Apparel
Manufacturing sector, believes that the
Domestic Apparel Industry could take a Hit of
almost one lakh crores due to the lockdown
and the expected significant slowdown in
economic growth once the lockdown is lifted.
2. Possible Job Losses: The estimated drop
in sales would mean that almost 50 lakh jobs
in the Apparel Industry are at risk. With the
global slow down, and the cascading effect
on other sectors of the Textile Industry, almost
one crore jobs may be lost in Textiles and
Apparels alone.
3. Down Sizing of Operations: About 80 per
cent of the members who participated in the
survey have indicated that they will need to
down-size their organisation immediately. A
minimum 30 per cent reduction in employee
count and about 20 per cent reduction in
salaries for all continuing employees is the
action that CMAI Members are likely to take to
ensure survival after the lockdown is lifted.
4. Working Capital Crunch and Losses due to
Bad Debts, Extended Credit and Inventory
Pile Up: 90 per cent of the Members expect a
30-40 per cent increase in inventory due to Zero
sales during the lockdown. Further, 100 per cent
of Members are worried of collections coming
from trade, post the lockdown. 25 per cent of the
collections may become bad-debts and members
expect a minimum 90-day additional delay in
collections. The choking of working capital, will
also lead to a delay in reviving factories and thus
75 per cent of the members expect normalcy in
the market only in FY 2021-22.
5. Possible Closure of Units: 20 per cent of the
Members have indicated that they may consider
closing down their business, as they will not have
the required additional resources to pay for costs
during lockdown.
The survey is the reflection of the bleak future that
awaits the Apparel and Textile Industry in India, due
to shut-down of economic activity in India. CMAI, has
appealed to Hon Prime Minister, Ministry of Textile,
Government of India, Finance Ministry, Government
of India and various State Governments to provide
support to the Domestic Apparel Manufacturers
to overcome the impact of lock-down and reduce
potential job losses.
CMAI’s Appeal to the Government:
WAGE SUBSIDY:
(A) 50 per cent Wage Subsidy of up to R5,000/- per
month for five months from March 2020
to July 2020.
(B) PF and ESIC Contribution of Employer and
Employee to be done by Government for three
months (March to May 2020) for employee drawing
wage not more than R15,000 with no cap on number
of employees in the company.
INTEREST SUBVENTION:
All Banks to offer Interest Subvention of five per cent
on total borrowings.
WORKING CAPITAL:
25 per cent additional Working Capital to be made
available on a Mandatory Basis (not to the option of
the Bank), subject to available Drawing Power on
revised norms.