The impact of the COVID-19 pandemic on business is unfathomable as of now, but the total business impacted so far can be estimated at US $ 3 billion, according to the findings of a survey conducted by Rajesh Bheda Consulting (RBC).
A majority of exporters also confirmed that their customers refused to pay for the orders. Around 77 apparel exporting organisations from different manufacturing hubs of the country responded.
RBC is a well-known management consultancy organisation focussed on improving the competitiveness of fashion industry entities.
Extrapolating the results of the survey at the apparel export industry level, this could result in export orders worth US $ 4.17 billion being cancelled or put on hold. This amounts to almost 25 per cent of the annual apparel exports from the country.
Since the Indian industry mainly executes Spring/Summer orders, January-March are the peak production months, and hence the impact is severe.
The survey also says that the combined value of orders cancelled and on hold is US $ 1.49 million per respondent factory. For 56 per cent respondents, payments were delayed, whereas in 19 per cent cases, customers refused to pay for the orders.
It is pertinent to mention here that out of the cancelled orders, in 22 per cent cases, the buyer had paid for the material while in 35 per cent cases partial payment for the material was received. In the remaining 43 per cent cases, no payments were received.
RBC also informed in a press release that though the results are based on a relatively small sample, these do provide much-needed data reflecting the scale of the challenge, as experienced by the respondents and its potential impact on the industry.
“Even if one considers the fact that participant factories are likely to be larger; the results need to be moderated. The total business impacted can be estimated at US $ 3 billion. As a result, the apparel exporter community of India is likely to face unprecedented liquidity challenges and the livelihood of millions of workers is at stake,” said Dr. Rajesh Bheda, MD, RBC.
