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Apparel export industry will perish without special package: AEPC
New Delhi, April 1 - The Apparel Export Promotion Council (AEPC) on Wednesday asked the Prime Minister for immediate support from the government and said that in the absence of a stimulus package, the sector will not survive.
"Unless the government immediately announces an economic package, with specific focus on the apparel export sector, given the fact that our products are 'perishable', our industry that employs 12.9 million workers, will die a slow death," it wrote in the letter to Prime Minister Narendra Modi.
Elaborating the situation of the apparel exporters, AEPC Chairman A. Sakthivel said that overseas buyers and buying houses are either cancelling or postponing confirmed export orders and are also holding back or indefinitely deferring the payment for goods already shipped or ready-to-be-shipped and asking for hefty discounts.
"Apparel industry is a seasonal industry and the products are similar to a 'perishable commodity' as they are a tailor-made, design-specific, fashion-specific export and any cancellation this year may be redundant and have little or no salvage value next year," he said.
The cancellations, deferments and postponement of shipments have resulted in packing credits being eroded, and impacted the fund-liquidity position of the exporters, which is in a precarious condition, as the cash flows have completely stopped, he added.
While applauding the decision of the government to lock down the country till April 14 in the larger public interest, Sakthivel highlighted the fact that the apparel industry is one of the largest employers engaging 12.9 million workers directly and is also one of the largest employers of women, who comprise 65 per cent of the workforce.
About 70 per cent of the apparel units are in the MSME sector. It is imperative to note that the member-exporters strictly comply with national and international norms, and adhere to the highest levels of social responsibility, he stated.
In the apparel sector, labour costs form the single largest component of product costs where workers' wages are in the range of 25-30 per cent of the product cost as opposed to the industry norm of 7-8 per cent.
"Further, we operate under extremely competitive margins in the range of 3-4 per cent, and are completely dependent on export benefits granted by the government," AEPC Chairman said.
"We pray and request for a 'unique financial stimulus package' specific for our apparel industry, as our situation is different from the requirement of the other textiles industries or any other industry per-se," he said.
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