New Delhi: The Apparel Export Promotion Council (AEPC) on Monday wrote to the Prime Minister Narendra Modi urging the government to pay the wages of workers engaged in the apparel exporting industry for April and May to bail out the sector amid the coronavirus crisis.
AEPC Chairman A Sakthivel wrote in the letter: “We humbly wish to inform that we are not in a position to pay wages for the months of April and May despite our best intention, as there is absolutely no production and no revenue stream.
He also informed Prime Minister Narendra Modi that the industry has cleared all wages for March dutifully.
According to Sakthivel, the government can pay wages from the funds available in the Atal Bimit Vyakti Kalyan Yojana (ABVKY) Scheme, which has reportedly huge reserves of about Rs 91,000 crore, as contributed by employees and employers.
Sakthivel said that the apparel exporting industry, which is a major employer, has been very badly impacted due to COVID-19 as principal export markets of the US and Europe are under lockdown since the past several weeks. The sector urgently needs a big stimulus package from the government, he said.
“Buyers have not paid us for goods shipped months ago. On top of that they have cancelled or postponed deliveries of current orders. Overall, we estimate a loss of export of over $4 billion. Coupled with this, the lockdown in our country has also resulted in complete stoppage of work,” Sakthivel said.
Apparel products exported to the fashion retailers of the world have a shelf life of two-four weeks only and thereafter they sell at deep discounts, as per the industry body.
The letter informed that the buyers are either not paying or asking for hefty discounts for merchandise already shipped. Some have cancelled confirmed orders and some have postponed with discounts, it said.
Sakthivel said that the apparel exporting industry is highly labour-intensive where the wage bill is about 30 per cent of the product cost, whereas in other sectors it ranges around five per cent. He also noted that the apparel sector works on very low margins of 4-5 per cent.
Sakthivel said that sector players are not only facing an acute fund crunch, like many other industries, but are also incurring huge losses due to cancellations and discounts.
This, coupled with the fact that there is no revenue generation during the lockdown, will lead to the closure of many factories and consequently result in huge job losses, he said, adding that it has become extremely difficult to economically survive in these trying times.
“A matter of immediate concern is payment of wages to workers. We have been explaining to our members the need to pay wages as per statutory/moral obligation. However, the feedback we have received from the majority of exporters is that in spite of best intention to pay there is simply no liquidity available to pay,” Sakthivel wrote.