31% apparel units to shut down, 2.5 mn jobs at risk due to lockdown: CMAI

Around 31 per cent of domestic apparel factories might close and about 2.5 million workers could lose jobs as a result of the extended lockdown, imposed to fight coronavirus disease (Covid-19), impacting their business, says a survey conducted by the Clothing Manufacturers Association of India (CMAI).

Around two-thirds of those who participated in the survey said they would not be able to pay wages for April, though 92 per cent paid wages and salaries for March. Job losses in the textile value chain could be around 10 million, they said.

With the extended lockdown and loss of sales during the peak consumption (festive) period, 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.

“MSMEs see no future and want to shut operations. Considering that close to 8 million people are employed by the domestic apparel industry, almost 2.5 million workers will be out of jobs,” CMAI said.

About 67 per cent of respondents said they would not be able to pay wages for April. With no sales and support for additional working capital from banks, factories don’t have funds. Non-payment of wages could lead to significant unrest, and CMAI members are worried that owners might not be able to visit their factories, if wages are not paid.

The association asked the 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.

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