31% of domestic apparel factories may close down post coronavirus lockdown: CMAI

Around 31% of the domestic apparel factories may close down post the lockdown, according to a survey by Clothing Manufacturers Association of India (CMAI).

The survey said that with the extended lock-down and loss of sales during the peak consumption (festive) period, Micro, Small and Medium Enterprises (MSMEs) see no future and want to shut operations.

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“Considering that close to eight million people are employed by the domestic apparel Industry, almost 25 Lakh workers will be out of job. The job losses in the textile value chain will compound further and almost one crore job may be lost there,” it mentioned.

The association comprises 4000+ manufacturing members and over 25,000 distributors, agents and dealers as members. It employs over 1.2 million workers in factories and around four million employees across the entire domestic apparel value chain.

While 92% of CMAI members have paid wages and salaries to their workers for March, majority of the members will not be able to pay wages for April & May, according to the survey.

Although factories closed down on 18th March, 92% of CMAI members have paid wages and salaries for the whole month of March. Members have collected only 30% of the receivable for March, leading to a significant cash crunch. Many of the members have had to take loans to pay the March wages, the survey said.

The survey suggests that 67% (2/3rd ) of CMAI members will not be able to pay wages for April.

“With zero sales and collection and no support for additional working capital from banks, factories don’t have the funds to pay wages. Non-payment of wages could lead to significant unrest. Members are worried that owners may not be able to visit their factories, if wages are not paid,” it said.