Apparel exporters seek Narendra Modi's intervention for stimulus package; say overseas buyers cancelling orders
New Delhi: Apparel exporters on Wednesday sought Prime Minister Narendra Modi's intervention in providing a specific financial stimulus package to protect the industry and its workers who are struggling to deal with the impact of COVID-19 pandemic.
In a letter to the prime minister, Apparel Export Promotion Council (AEPC) chairman A Sakthivel said that unless the government immediately announces a fiscal stimulus package, the apparel export sector, which employs 12.9 million workers, will "die a slow death".
Elaborating the situation of the exporters, 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/ ready to ship 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.
He said that about 70 percent of the apparel units are in the MSME sector and it is imperative to note that the member-exporters strictly comply with national and international norms.
''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.
"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," he said.
He urged the government to announce several measures including payment of wages of workers through ESI funds or through Atal Bimit Vyakthi Kalyan Yojana (ABVKY) Scheme; and payment of employer's portion of EPF for the months of March/April/May/June for all companies.
It also sought contribution by the government towards salaries of employees for six weeks, and deferment in the payment of GST dues for a period of three months without penalty.
Updated Date: Apr 01, 2020 17:20:23 IST
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