Indian Knitwear Sector Undergoing Severe Stress

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Raja M Shanmugham, president of the Tirupur Exporters Association, representing a major knitwear hub, said that the past three months [since the Indian lockdown, which started 24 March] totally crippled the industry and they are now limping back with half the capacity. They don’t know when the situation is going to be fully normal.

According to Shanmugham, once the government allowed the industry to restart operations in late May, it took more than a month to reboot the industry’s supply and value chain, with the only relief being that these summer months are usually a lean period in south India’s Tirupur (in Tamil Nadu).

The situation is even worse in the north Indian knitwear cluster of Ludhiana, in Punjab, where according to Vinod Thapar, president of the Ludhiana Knitwear Club, the industry is largely unorganised and 90% of the units are located outside officially designated industrial areas. This is a problem because “when the lockdown opened [partially in May] the industrial units were permitted to restart but only the ones situated in designated areas,” he says.

One real problem for the Indian knitwear industry nationwide is that it has struggled to retain its labour force of migrant workers, mostly hailing from the poorer states of Bihar, Jharkhand and Odisha. Many of these workers travelled back to their home villages, once the plants were closed, and companies have not been able to persuade many to return.

As a result, currently only 25-30% of the usual workforce is present in Ludhiana, which is operating with restrictions on second shifts and a night curfew.

Other Struggles:
Meanwhile, manufacturers are also finding it tough to secure new orders, both domestic as well as from the export market. “The buyers are not placing orders as many brands are facing bankruptcy,” says Shanmugham.

This is a global rather than Indian problem: “People are sparing spending and allocating much of it to the health and food needs,” he adds. For this reason, fast fashion is especially weak, with consumers choosing “durable dresses over fashion products for at least the next year”.
However, there is also a silver lining for the knitwear sector in that demand for lingerie and other innerwear has picked up. Shanmugham also speculates that this could be because of an increased focus on personal hygiene during the coronavirus pandemic.

Also, knitwear has another built-in advantage over woven clothing during this crisis: “Primarily, woven products are used as business casuals and [at least] in America, a large part of the workforce is working from home,” says Ashesh Amin, New York-based global sourcing executive for several major brands. “Knitwear is being purchased for stay-at-home loungewear.” Indeed, even for Ludhiana’s knitwear units, knickers and pyjamas constitute a major part of the current demand, says Thapar.

On the plus side, Indian yarn makers have been able to source cheaper cotton since the disease hit , which is currently trading at INR16,150 (US$215) per bale (170 kg) in comparison to INR19,500 (US$260) per bale before the lockdown in the Mumbai’s futures market. This reflects falling demand and the fact that the harvest season was over by March: “By the time lockdown started, farmers had already marketed 80% of their crop,” and therefore the cotton procurement process remained largely unaffected, says Dhiren N Sheth, president of Cotton Association of India, in Mumbai.

Hence with this ongoing crisis Shanmugham adds only the tough will get going and somehow we have to push ourselves by strengthening our inherent capacities whatever they are.

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