Reeling under the severe onslaught of COVID19 pandemic, the Indian apparel exporters have approached Prime Minister Narendra Modi for the government’s intervention to treat the labour-intensive sector at par with the MSME sector.
“We would request that the apparel exporting industry may be treated at par with the MSME sector as we work on wafer-thin margins of 4-5% and with a high-labour force with labour wages forming 25-30% of the product cost,” AEPC chairman Dr A Sakthivel wrote in a letter to the PM.
The AEPC chairman said the present crisis is the biggest challenge faced by the apparel export industry, which is facing huge losses due to non-payment of export bills and cancellation of export orders.
“Huge stocks are with us because of closed-down globally and every apparel exporter is facing severe financial crisis.”
“You will also appreciate that the apparel export industry is one of the largest employers of the country employing 12.9 million directly and is also one of the largest employers of women forming 65% of the work-force,” he said.
Dr Sakthivel said while the apparel exporters are thankful to the government for various important decisions to revive the sector including the permission to export non-surgical and non-medical masks, they would want the government to consider some of their issues considering them at par with the MSME sector.
The benefit under the Pradhan Mantri Garib Kalyan Package (PMGKP) of payment of 12% of employer and 12% employee contributions towards EPF accounts of eligible establishments, extended by another 4 months (April-July 2020) is also a very welcome step, he said.
“However, it is strongly suggested that this benefit be granted irrespective of the number of workers employed and more specifically to cover all apparel exporting units who may be notified as eligible establishments, since they are highly labour intensive with a huge women work-force,” he said.
“A large number of our exporters lost huge money by booking forward contracts and we feel that the loss can be converted into a working capital-term-loan with a repayment in three years with a 6% interest rate,” he added.
Dr Sakthivel also wished that the facility of granting additional working capital to all MSMEs without collateral may also be granted to all apparel exporting industries irrespective of their size.
“The benefit of Interest Equalisation Scheme extended earlier this week by one year may be extended by at least two years and the benefit of 5% may kindly be extended to all apparel exporting units at par with MSME sector,” he requested.
Saying that AEPC has studied the global market trends, Dr Sakthivel stated “we find that China, Cambodia, Vietnam and Indonesia are exporting 80% manmade fibre garments globally”.
“We also find that top importing countries are buying 85% garments made out of manmade fibre, whereas we export 90% of cotton garments only,” he added.
To encourage AEPC members to export manmade fibre garments, Dr Sakthivel requested the Prime Minister to sanction 6% COVID fund for encouraging export of manmade fibre garments.
“We assure our exports will be increased by 100% in 3 years by exporting manmade fibre garments,” Dr Sakthivel noted.