Europe shutdown hits garment exporters

City-based garment exporters and manufacturing firms, which had expected an increase in the number of orders, following the outbreak of coronavirus in China earlier,

City-based garment exporters and manufacturing firms, which had expected an increase in the number of orders, following the outbreak of coronavirus in China earlier, are now facing a multitude of problems after a complete shutdown in Italy, France, Spain and other European countries due to the pandemic.

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Shipments, ready for export, are finding no takers as warehouses, logistic firms, markets and banks have shut operations in most countries across Europe. The Gurugram-Manesar urban complex has around 200 large export-oriented firms, which have a combined turnover of ₹25,000 crore to ₹30,000 crore, as per a city-based industries association.

Given the current situation abroad, the exporters said that they are expecting the problems to increase. “We have not been able to get payments for shipments that have already been dispatched. Usually, when the goods are sent by air, the payment is received within a week. But since banks, clearing houses and markets are shut, things have come to a standstill,” says Manmohan Gaind, chief executive officer of MM Creations and general secretary of Manesar Industries Welfare Association.

Another problem for the exporters in the city is that new orders have dried up and those that had been placed earlier are being postponed. The panic caused by the spread of coronavirus has also led to a shortage of labour and factories are also facing trouble on that count, says Manish Singh, general manager, Galaxy Elegant, an export company with plants in Gurugram and Manesar.

“We are finding it difficult to complete the orders and meet deadlines and as a result, there have been multiple instances of order cancellation without liability,” says Singh.

The garment exporters said that they were already reeling under a prolonged slowdown that was witnessed in 2019 and had hoped that things would improve in 2020. Initially, with the outbreak of coronavirus being restricted to China, the city-based industry had also received fresh orders from European countries, but the worldwide pandemic has dashed all hopes of a revival, they said.

Satyendra Singh, general manager of Udyog Vihar-based East West Exports, which makes women and kids’ garments, said that they are now expecting a major hit on revenue, given the fact that their major buyers have closed operations in Europe. “The movement of items has been restricted as airlines have stopped operations. Necessary clearances are not being issued. Even if the airlines agree to move the cargo, the cost is too steep,” he said.

Export companies based in the city want the government to give them five to six months to deposit the money on account of contributions, for the labour force, such as EPF, ESI, etc. “There is a need for a financial package for medium and small enterprises. The collection of GST should also be relaxed. Otherwise, this sector will get badly hurt,” said HKL Magu, managing director of an export company.