The Clothing Manufacturers Association of India (CMAI) has warned that the Indian textile importers as well as exporters of raw material could suffer amid the ongoing novel coronavirus outbreak in China, which has led to a partial clampdown across its apparel manufacturing units.
India exports cotton yarn to China, and imports synthetic yarn and fabric worth over $450 million and $350 million, respectively. Moreover, India also imports accessories, such as buttons and zippers, worth $140 million. Local manufacturers will now need to scout for alternatives amid a shortage of Chinese raw material.
A shortage of such textiles from China could increase cost of finished goods by 3-5%, P. Chandrasekharan, secretary, CMAI, said on Thursday. CMAI represents 20,000 firms, including makers of ready-made garments, exporters, retailers and ancillary industries.
However, the association said that there could be a possible upside to the outbreak—at least for manufacturers in Bangladesh and India—as global suppliers rush to look for alternatives to procure garments and textiles beyond their spring-summer collection.
“The outbreak has equally affected the textile and apparel industry, where China plays a core role in the global supply chain," CMAI said in a note. The prevailing situation in China, along with the uncertainty over production resuming, is posing a major challenge for Indian manufacturers who are dependent on supplies of raw materials from China, the note added.
India exports 20-25 million kg of cotton yarn every month to China, but a partial closure in manufacturing units there has led to a drop in demand for cotton yarn. This, in turn, has led to a 3-4% drop in cotton yarn prices in the domestic market, as traders anticipated a fall in demand from China. According to CMAI, if the coronavirus contagion continues unabated, China’s imports of cotton yarn could decline further and, hence, impact the cotton yarn export business of India.
“Chinese textile factories have halted operations since the Chinese New Year. If the outbreak continues, Indian garment manufacturers will need to look at other alternatives, including local sourcing, which in turn may increase the finished goods cost by 3-5%," the CMAI statement said.