The Apparel Export Promotion Council (AEPC) has asked the Centre to pay the wages of workers engaged in the apparel exporting industry for April and May.
“We humbly wish to inform that we are not in a position to pay wages for the months of April and May despite our best intention, as there is absolutely no production and no revenue stream,” AEPC chairman Dr A Sakthivel wrote in the letter.
It also informed that the industry cleared all wages for March dutifully following the Prime Minister’s request.
He said the Government can pay wages from the funds available in the Atal Bimit Vyakti Kalyan Yojana (ABVKY) Scheme, which has, as understood, huge reserves of about Rs 91,000 crores, as contributed by employees and employers.
Dr Sakthivel said the apparel exporting industry, which is the largest employer after agriculture, has been very badly impacted due to COVID-19 pandemic as principal export markets of USA and Europe are under lockdown since the past several weeks.
The sector urgently needs a big stimulus package from the government, he said.
“Buyers have not paid us for goods shipped months ago. On top of that they have cancelled/ postponed deliveries of current orders. Overall, we estimate a loss of export of over $4 billion. Coupled with this, the lockdown in our country has also resulted in complete stoppage of work,” he said.
Apparel products exported to the fashion retailers of the world have a shelf life of 2-4 weeks only and thereafter sells at deep discounts.
The letter informed that the buyers are either not paying or asking for hefty discounts for merchandise already shipped. Some have cancelled confirmed orders and some have postponed with discounts.
Dr Sakthivel said the apparel exporting industry is highly labour-intensive where the wage bill is about 30 per cent of product cost, whereas in other sectors it ranges around 5 per cent.
He further informed that the apparel sector works on very low margins of four-five per cent.
“A matter of immediate concern is payment of wages to workers. We have been explaining to our members the need to pay wages as per statutory/ moral obligation. However, the feedback we have received from the majority of exporters is that in spite of best intention to pay there is simply no liquidity available to pay,” Dr Sakthivel said.