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Impact of COVID-19 on India's Textile Industry, Positive Outlook

June 16, 2020

Jennifer Woodson is a textile expert who maintains a blog on sustainability & textiles.

The impact of COVID-19 on the global economy has been felt in many industries, including the textile and apparel industry. With retailers closed, employees dealing with lost wages, and consumers making fewer discretionary purchases, brands are in a scramble to minimize the inevitable losses.

There are many ways that brands are choosing to minimize loss: furloughing employees, layoffs, pay cuts, and canceling orders with suppliers are just a few of the quick ways brands can effectively 'save money'. So what happens when an order is canceled? Let's look at India for a good example.

India is a leading producer of cotton and other cellulosic fibers such as jute and flax. In 2018, India produced about 6.2 billion kilograms of cotton. A stark comparison to the 850 million kilograms of synthetic fibers (polyester, nylon, etc.). As much of the population is dependent on these exports in some capacity, it makes the impact of COVID-19, and the subsequent canceled garment orders, devastating to the local economy.

Compared to April and May of last year, India's textile and apparel exports have declined by 73% from $6.07 billion to $1.63 billion (when compared to April and May of this year). This started when India experienced a 70 day nationwide shutdown due to COVID-19, followed by many canceled orders from brands and retailers, mostly in the United States and the European Union, citing 'force majeure' clauses in their contracts. The effects of canceled orders do not stop at the garment factory; it goes through the entire supply chain including fiber producers, spinning mills, dye houses, and textile mills.

Despite the many challenges currently being faced by India, there is light at the end of the tunnel. With growing concerns surrounding having supply chains heavily dependent on China, brands are looking to move all or part of their supply chain to other nations. According to Harvard Business Review, "CEOs are confidentially asking their supply chain teams to develop additional sources that are completely independent of China.". This can bode well for India in the long run as Trading Economics has predicted substantial increases in exports in 2021 and 2022, with an overall upward trend.