The deadly coronavirus has been declared a global medical emergency and is impacting global manufacturing at the same time. The epidemic has also affected the textile and apparel industries, with China playing a central role in global supply chains.
The shutdown due to the coronavirus in China will also impact the Indian textile and apparel industry, according to a press statement from the Clothing Manufacturers Association of India (CMAI). The prevailing situation in China and the uncertainty over starting production pose a major problem for Indian manufacturers who depend on the supply of raw materials from China. Meanwhile, global apparel brands will have to consider other manufacturing destinations such as India.
CMAI lists out a series of impacts of the coronavirus on the Indian textile and apparel industry.
1. India’s yarn exports to China have decreased
On average, India exports 20-25 million kilograms of cotton yarn to China every month. Cotton yarn prices in the domestic market fell by 3-4% as traders expected lower demand from China due to the prevailing situation in the country. Further extension of the coronavirus will lead to a fall in cotton yarn imports from China, thereby impacting India’s cotton yarn export business. This will divert India’s excess cotton yarn to the domestic market, further reducing the price of cotton yarn.
2. Synthetic textiles and accessories
India imports US$460 million worth of synthetic silk and US$360 million worth of synthetic textiles from China every year. More than $140 million worth of accessories such as buttons, zippers, hangers and pins were also imported. India does not have the domestic supply base to meet the demand for so much of these raw materials.
Due to the epidemic, Chinese textile factories have stopped operations since the Lunar New Year. If the epidemic continues, Indian apparel manufacturers will need to consider other alternatives, including local sourcing, which may in turn increase the cost of finished goods by 3-5%. In addition to this, identifying a supplier on such a short notice can have implications in terms of lead time, quality and cost.
3. Increased global demand for protective masks
China is importing large amounts of medical protective equipment from around the world, including surgical masks and protective clothing. Sales of such products have grown dramatically in other Southeast Asian countries and even Western countries. The supply of such products cannot meet the demand.
On January 31, 2020, the Indian government banned the export of all personal protective equipment, including clothing and masks, to avoid shortages in India. However, nearly a week later, the ban was lifted to help China fight the disease.
4. The Indian synthetic value chain cannot benefit
The Indian government has abolished the 2.5% anti-dumping duty on pure terephthalic acid (PTA). Strengthen the country’s synthetic textile industry with relief to synthetic yarn manufacturers. However, Hubei and many areas in central China, the manufacturing hub of raw materials, are effectively at a standstill. Therefore, importing PTA from China is currently not an option and manufacturers are still forced to rely on domestic supplies to meet their needs.
5. Transfer clothing orders from China
In January, buyers from Europe and the United States usually go to China to meet with clothing exporters for the next season. Negotiate. However, due to the coronavirus scare, most buyers are looking for alternatives.
One factor that still favors China is that many companies already produce clothing suitable for spring and summer. Workers often go home on vacation during the holidays around the Spring Festival (just before the outbreak), so companies plan to reduce production during this period.
However, if this continues in the coming months, buyers will be forced to seriously explore other options, with Bangladesh and India gaining an advantage over Vietnam, Cambodia or any other Southeast Asian supplier. India has a complete supply chain which puts it at the top of the competition, but on the other hand, Indian apparel manufacturers have neither the scale nor the cost competitiveness to prove themselves as a reliable sourcing option. </p
