Garment sector MSMEs to face more jobs cuts & closure: CMAI Survey

New Delhi, July 31 (KNN) Condition of Micro, Small and Medium Enterprises (MSMEs) involved in domestic garment sector seems to be deteriorating as the sector expecting more jobs cut and closures in the coming days, said the survey by the Clothing Manufacturers Association of India (CMAI).

The 3rd survey conducted by CMAI amongst its Members reflects the crisis the domestic garment is going through, with 74 per cent of its respondents seeing a 90 per cent drop in sales for the quarter ending June 2020. An additional 13 per cent indicated a drop of more than 75 per cent.

''This indicates that 87 per cent of the Industry saw a more than 75 per cent drop in their revenues in the 1st quarter of 2020-21. The projection for the coming quarter (July to September) is equally grim. 95 per cent of respondents expect to operate at less than 50 per cent of their production capacity. Of these, as many as 68 per cent of the respondents anticipate using less than 25 per cent of their production capacities in the next 3 months,'' said the survey.

The respondents do not see much improvement in the next 12 months either. Around 21 per cent of the respondents expect to operate at less than 25 per cent of their capacity in the coming 12 months, and 46 per cent expect to operate at between 25 per cent and 50 per cent. Which means almost half of the Industry expects to operate at less than 50 per cent of capacity in the coming 12 months.

''What is obviously adding to the worries of this largely MSME dominated sector, is the drying up of working capital funds, with manufacturers not receiving payments from the equally stressed retail sector,'' CMAI said.

Reacting over the survey report, Animesh Saxena President of The Federation of Indian Micro and Small & Medium Enterprises (FISME) said, ’Definitely, the impact will be severe and job loses will be there and it will also stop the creation of the new jobs. I don't think that market will pick up before the festivals. The situation is very bad.’’

‘’The recovery is only expected now next year once the pandemic is over,’’ he added.

The survey further revealed that Around 91 per cent of the respondents have received less than 25 per cent of their dues in the last quarter – and close to 85 per cent are not expecting their dues to be cleared in the next 3 months. In fact, 44 per cent of the respondents fear that 20 per cent -50 per cent of their dues will turn in to Bad Debts, and another 10 per cent expect even a higher percentage of Bad Debts.

“All these findings reflect an extremely grim future for the Garment Industry, and survival of many of the smaller players look extremely doubtful’, said Rakesh Biyani, President of CMAI.

“It will take at least another year for our Members to reach back to the normal business conditions” added Rajesh Masand, Vice President.

Chief Mentor CMAI, Rahul Mehta, cautioned about the severe job losses in the Industry.

“Looking at the survey results, I would not be surprised if close to 25 per cent to 30 per cent units shut down. I am also expecting job cuts of 25 per cent to 30 per cent even in the companies that somehow survive this year” opined Mehta.

The Industry currently has around 85,000 factories, largely in the MSME Sector, and employed around 12 million workers in the Pre-Covid era.