31 % of Apparel Manufacturing MSMEs likely to Shut Down Operations Due to COVID-19 Outbreak

Around 31 per cent of domestic apparel factories might close and about 25 lakh workers could lose jobs as a result of the extended lockdown, due COVID-19 pandemic, says a survey conducted by the Clothing Manufacturers Association of India (CMAI).

''MSME businesses are seeing no future and are wanting to shut operations. Considering that close to 8 million people are employed by the Domestic Apparel Industry, almost 25 lakh workers will be out of job. The job losses in the Textile value chain will compound further and almost 1 crores job may be lost in the Textile Value Chain,'' CMAI said.

The number of companies that are on the verge of closing down has gone up by 50 per cent, compared to the first week of the lockdown.

With the extended lock-down and loss of sales during the peak consumption (festive) period, the grim reality is becoming more obvious.

67 per cent (2/3rd) of the Members will not be able to pay wages for April. With Zero sales and collection, NO support for additional Working Capital from Banks, factories don’t have the funds to pay wages. Non-payment of wages could lead to significant unrest. CMAI members are worried that owners may not be able to visit their factories, if wages are not paid.

The association pleaded to government to provide 50 per cent wage subsidy up to Rs 50,000 per month for five months from March, provident fund contribution for both employer and employee for three months for employees with wages Rs 15,000 or less.

All Banks should offer interest subvention of 5 per cent on total borrowings, 25 per cent additional working capital to be made available mandatorily, subject to available drawing power on revised norms, extension of moratorium on term loans and working capital loans from three months to six months.

CMAI also demanded to waive of minimum demand load charges for 4 months from March 2020 to June 2020 and also sought additional 90 days for depositing of GST dues for March while 30 days for GST for May and June 2020.