Problem & Solution: India's Struggling Fashion Industry

The fashion industry around the world has got a negative impact due to coronavirus. The pandemic has forced to shut down every design house locally or globally for more than 60 days. April was the worst-hit month and so will be May and coming months until the world gets the vaccine for it.

Workers in Bangladesh, Vietnam, India, and many other countries getting severely affected. Most of the garment workers lost their job because of shut down. Production companies are in huge debt as they start producing the goods with mere advance payment.

Also because the brands around the world are facing huge de-growth in sales due to lockdown resulting in the cancellation of orders. 

One of the exporters from Bangladesh was requesting the concerned brand on linkedin to release the payment as he is unable to afford the livelihood of around 2500 workers in his company. He mentioned that he tried to help 2500 workers during lockdown by paying salaries for March and April month but he can't afford it further if he doesn't get paid from the brand for the produced goods ready for shipment.

After earning a multifold profit on a single unit of fashion & accessories product, how brands are acting insensitively during the pandemic? 

Similarly many Indian exporters and domestic suppliers are facing the same situation across the country where they have to beg for the payments. Despite so many clauses written in brand-exporter agreements, brands are denying to help. 

Apparel, textile and yarn exporters got worst hit in March, April and May due to negligible demand from importing countries.

In recent years, Indian fashion export dropped due to heavy competition from third world countries and due to poor unsupportive export policies if compared to China and Bangladesh. China's free trade zone and trade-friendly policies still holding its top position in apparel exporting countries.

China has huge apparel market in Beijing, Guangzhou and factories in other province to supply huge global demand bringing billions of foreign currency to its country.

If compared to Bangladesh, who has been the second largest producer of ready-made garments after China, contributing around 20% to the national GDP whereas Indian RMG sector (ready-made Garment) is contributing merely 2% to it's national GDP.

Domestic brands and companies are struggling for sales due to complete lockdown. Job loss and salary pay cut resulted in less money in pocket to buy anything else than food.

Whooping 20 lakh crore package announced by the government of India will help the industries or not, that's a matter of question. As the money is announced for the industry which is struggling for their product demand. What they will do with the money if the product is not in demand.

Based on current situation, country should focus on organised future investment. Package should be versatile in serving second largest population of the world with huge domestic demand.

Possible solution to solve the problem of Indian Fashion Industry-

1. Allotting Free Trade Zone state wise with relaxed trade policies and tax benefits for Garment Sector near with in 30-50 km range of airports.
2. Government subsidies & investment in machinery & infrastructure for companies in the free trade zone on an App-based System instead of running behind bureaucracy for every signature.
3. Identifying potential yarn, textile, and apparel producers and systematically setting up sectors in the free trade zone.
4. Special Research Centres to continuously update the industry with technical knowledge and global competitions to make it a world-class apparel hub state wise.                                                                                                                                                                 
5. Exclusive All India Cargo Transport Permit for the companies in the Free Trade Zone to speed up cargo movement and thus improving the global supply chain.
6. Building infrastructure for Fashion & Apparel trade shows & Infrastructure for Fashion Shows for fashion students in the Free Trade Zone.
7. Government-funded schools, colleges, and hospitals for the worker's children working in companies of Free Trade Zone, like central schools and army schools across the country. This will reduce liabilities on workers and it will benefit companies to manage wages.
8. Special subsidies & loan facility to Indian retailers anywhere in the country for promoting goods from Free Trade Zone companies.
9. Incubation program for designers and entrepreneurs.
10. Special marketing team to create and supply global and domestic demand.

The above suggestion has the potential of creating a million jobs in the future.

The country requires special attention to the apparel sector as it has the potential to drive the economy. The apparel sector is the 2nd largest employer but the contribution to the GDP is very less.

India has every possible resource to compete with the rest of the world. It just needs better long term plans and goals to work on to build future of its Fashion Industry. 

China is good at investment to build its future as its well said - 

"Only money Can Earn More Money."

The package announced should be more focused on long term plans and investments for providing infrastructure to support the companies to grow. To enable them to match the speed of the global supply chain with the competitive products.

Misuse of government funds and bankruptcy declaration or loss declaration are few easy escapes. 

Investment by the government must have plans for its recovery otherwise it will derail the vision of the country with the huge loss of taxpayer's money.

Author- Pramod Kumar