Covid-19: Apparel exporters seeks stimulus package covering wages, credit

Wants wages to be paid out of ESI funds, govt to make employer's PF contribution; seek minimum 25% hike in working capital limits, without additional collateral

Apparel exporters have urged the Prime Minister to roll out a specific financial stimulus package at the earliest to help the industry and its workers survive the impact of Covid-19 on export orders, shipments, payments and liquidity.

Pointing out that the apparel export industry employs almost 13 million workers, Apparel Export Promotion Council (AEPC) Chairman A Sakthivel said in a letter to the Prime Minister, "Unless the government immediately announces an economic package with specific focus on the apparel export sector, given the fact that industry's products are ‘perishable’, our industry ... will die a slow death."

Sakthivel said overseas buyers and buying houses are either cancelling or postponing confirmed export orders and are also holding back or indefinitely deferring payment for goods already shipped/ ready to ship, besides asking for hefty discounts.

The cancellations and postponements of shipments have eroded packing credits and impacted exporters' fund-liquidity position, which is in a precarious condition, as cash flows have completely stopped, he added.

About 70 per cent of the apparel units are MSMEs. AEPC's member-exporters strictly comply with national and international norms, and adhere to the highest levels of social responsibility.

"Labour forms the single largest component of product costs in the industry, with wages amounting to 25-30 per cent of the cost of production. Further, units operate at thin margins of 3-4 per cent, and are completely dependent on export benefits granted by the government," Sakthivel said.

“We pray and request for a ‘unique financial stimulus package’ specific for our apparel industry, as our situation is different from the requirement of the other textiles industries or any other industry per se,” Sakthivel said listing down the needs of the industry.

"Wages may be made out of the ESI funds we have been paying regularly over the years. The Atal Bimit Vyakthi Kalyan Yojana (ABVKY) Scheme of the Government is understood to have huge reserves of about Rs 91,000 crore from contributions made by employees and employers. The same may kindly be utilised along-with reserve funds for payment of wages," he added.

AEPC has urged the Government to pay for the employer’s portion of EPF for the months of March through June 2020, irrespective of the number of workers employed. It also urged the Government to contribute towards Salaries of employees for six weeks, or till normalcy resumes. It also wants the packing credit period for existing loans and export bill realisation period to be extended by six months.

AEPC has sought a minimum 25 per cent increase in working capital limits, without any additional collateral, and wants no penalty on forward covers.