CHENNAI: The garment sector in Tamil Nadu, already affected by a delay in GST refunds, is starring at a fast depleting stock of accessories sourced from China. The total shutdown in China owing to the novel Coronavirus outbreak has disrupted the supply chain. Also, there are indications that the sector may hurt its margin if accessories are sourced from a trader in India or overseas markets other than China.
The garment sector in Tamil Nadu’s Tirupur is heavily dependent on China for sourcing accessories and an exporter on condition of anonymity says his supplies are stuck in Guangzhou since January. 21. The present stock position could last till March, he adds.
The million dollar question is will India continue to depend upon China to open its factories and accept seamless supplies or convert this crisis into an opportunity? According to sources, accessories bought by Indian manufacturers from China are stuck as no deliveries have taken place after the Chinese New year since all units in that country remain shut.
Countries depending on China have learnt a lesson that they should have an alternative market for sourcing, says Apparel Export Promotion Council chairman A. Shakivel.
According to Tamil Nadu Handlooms and Textiles director M. Karunakaran the state’s textile policy would support the growth of knitting and textile sector.
The three-day 47th edition of India Knit Fair held Tirupur, recently, which saw the participation of 39 leading exporters from Tiruppur, Coimbatore, Chennai, and Kolkata, featured summer and winter collections in knitwear for all age groups, including infants, along with cotton, polyester, polycotton, polyester-viscose blended fabric apparels, Shaktivel said. Specially made garments made from banana cotton, blend with 80 per cent cotton and 20 per cent banana fibre, attracted visitors.
The Clothing Manufacturers Association of India (CMAI) claims China’s coronavirus shutdown will affect the Indian textile and apparel industry and there will be some negative impact, and some positive ones too. The association said that the global apparel brands would have to look at alternate manufacturing destinations such as India. On an average, India exports 20-25 million kg cotton yarn a month to China. Cotton yarn prices have fallen by 3-4 % in domestic market as traders anticipate a curtailed demand from China due to the prevailing situation there. Further prolonging of the Coronavirus will result in a decline in China’s imports of cotton yarn and hence, impact the cotton yarn export business of India. This will divert India’s surplus cotton yarn to the domestic market, further reducing the price of cotton yarn.
If China continues to battle with the Coronavirus and does not resume industrial operation, then Indian garment manufacturers will need to look at other alternatives, including local sourcing, which in turn may increase the finished goods cost by 3-5 per cent. In addition to this, identifying vendors in such a short time can take a toll on lead times, quality and cost.