In Delhi and Haryana, garment firms are hanging by a thread

In Delhi and Haryana, small businesses and daily wagers in the garments sector have been severely impacted by the pandemic even as large businesses and export firms have managed to stay afloat. Ashok Kumar reports on their struggle for survival amid frequent restrictions and low consumer confidence

Published - February 12, 2022 03:15 am IST

Garment workers at Neetee Apparel in Gurugram.

Garment workers at Neetee Apparel in Gurugram.

Rahul Vashisht is becoming increasingly despondent. In March last year, before the second wave of COVID-19 hit India like a tsunami, he had quit as general manager of a garments firm in Haryana’s Gurugram to set up his own digital printing unit in Delhi’s Ghitorni. The firm, Vamika Art Canvas, specialises in reproducing digital images on cloth. Digital print on fabrics used to be popular in pre-COVID-19 times. But low demand in the domestic market due to frequent COVID-19-induced restrictions forced the young engineer to massively scale down operations within a few months of starting the enterprise. “We did not have a print order for even a metre of fabric this December. If it continues like this for another few months, I will have to either cut the salaries of the staff to half or hire them on commission basis,” he says quietly.

This is the story of not just Rahul but several others who The Hindu spoke to in the garments sector of Haryana and Delhi, which has suffered a massive shock because of COVID-19. Demand has plummeted and consumer confidence remains low. There have been supply-side bottlenecks every once in a while. As a consequence, small businesses are struggling to, or have simply been unable to, keep up with big businesses with deep pockets. To make matters worse, the government, despite its celebrated ‘Make in India’ campaign, has lent little support, allege entrepreneurs. The industry has faced one of its most severe crisis in recent times. Though the overall economy is recovering, small entrepreneurs say their woes continue.

Rahul Vashisht quit as general manager of a garments firm in Gurugram to set up his own digital printing unit in Ghitorni in Delhi. The pandemic has severely affected his business.

Rahul Vashisht quit as general manager of a garments firm in Gurugram to set up his own digital printing unit in Ghitorni in Delhi. The pandemic has severely affected his business.


The COVID-19 impact

The situation was manageable until last Diwali though he had to borrow money from his relatives to pay rent, Rahul recalls. But the last few months, with the onslaught of the third wave, have been an unexpected nightmare. To cut down expenses, Rahul shifted the unit from the building’s first floor to its decrepit basement, where haphazardly cut plywood pieces have been nailed together to erect “walls” so that there are separate “rooms” for the managing director, the visitors, and the lone digital printing machine. Black cloth sheets have been spread everywhere to cover the rough, uneven floor of the 4,000-sq ft basement. The makeshift office reflects the state of the business.

Rahul has already shut the reactive textile printing unit and laid off three-fourths of the staff. Now, he has only three people on board — textile designer Brijesh Upadhyay, store in-charge Sunil Kumar and helper Sachin — who all have multiple roles. Brijesh lost his well-paying job at a textile firm in Haryana’s Faridabad during the national lockdown in 2020. He was without work for almost eight months before securing this job. “Our salaries have gone down and there are often delays in payment. There is no part-time work to do. I am earning almost half of what I got before the national lockdown. Textile designers who were earning about ₹50,000 a month are now compelled to work for ₹20,000 or even less,” says Brijesh, a native of Uttar Pradesh’s Aligarh. Warming his hands over the room heater in the printing machine room, Brijesh says he sits idle all day. “There have been no orders from our two main clients in Kirti Nagar and Sahibabad for months now,” he says. Sunil says he doubles up as a machine operator, receptionist and sometimes even helper.

Even with the benefit of hindsight, Rahul defends his decision to quit the job and set up the business. “Demand had picked up soon after the national lockdown. I had a very good first month. But the second COVID-19 wave hit consumer confidence more than the first. It created a sense of uncertainty and fear. While consumers now want to save for the rainy day, businessmen too have cut down on stock due to frequent disruptions,” he says.

With customers cutting down on “unnecessary” expenses such as clothes, weekly markets like Shani Bazar and Budh Bazar, where they used to shop, have also seen disruptions thanks to the second and third COVID-19 waves. Night curfews and weekend lockdowns have made matters worse. In Delhi’s Sarojini Nagar and Lajpat Nagar markets, for instance, pavement dwellers, who are essential for these markets, are now not allowed by the civic body and this has further affected demand.

Big fish eat small fish

Rahul says no help has come his way despite the claims of the government to support start-ups through its ‘Make in India’ initiative and offers from banks to provide credit to Micro, Small and Medium Enterprises. “All this talk of ‘Make in India’ seems to be only for IT firms. There is no support for entrepreneurs like me who are creating jobs for poor workers by setting up firms. You need three years of Income Tax returns details of the firm to avail of a bank loan. So, I had to borrow ₹50 lakh from relatives and friends to set up the business. I paid two months’ rent during the lockdown as well as electricity bills despite having no work,” says the 29-year-old.

Big export firms catering to international brands and clients abroad, mostly in European countries, have stayed afloat. In fact, they have seen demand pick up of late. But small firms targeting the domestic market, which mostly serves the poor and the lower-income segments, have been badly hit. “Big digital units have drastically slashed their prices and pushed smaller players out of the competition,” Rahul says.

Countless small entrepreneurs in the garment industry who cater to the domestic market are on the verge of shutting shop. Vijay Aggarwal, who runs a garments unit in Delhi’s Uttam Nagar, traces the beginning of his sorrows to demonetisation. Hisbusinesswas further hit with the emerging trend ofonlinesales, he says.The last straw on the proverbial camel’s back was the national lockdown in 2020. Starting off his business with 20-odd tailors two decades ago, Vijay is now left with only three. He surrendered his Goods and Services Tax registration number recently.

Debt has grown over the past few years while profits have narrowed down, he says. “The cost of fabric has doubled over the past few months, but it is difficult to find customers for readymade garments even at the earlier rate. Small entrepreneurs running garments and textile units are now forced to shut down their businesses. The big fish are eating the small fish, and there is no support from the government. The day is not far-off when small entrepreneurs like me will turn into workers. And the problem is not confined to one sector. My friend who is running a small automotive manufacturing unit is also facing a similar situation,” says Vijay.

Onkar Singh Galla, proprietor, Hypnotic Clothings, Industrial Model Township in Manesar, Gurugram, says it is a “mixed bag” as some companies are overworked and some are without work. “The factories in Delhi which cater to the local market are mostly suffering. In Gurugram we mostly have export units, which are doing fine,” he says.

Onkar’s company primarily deals in western female garments — tops, pants and jackets — and caters mostly to clients in the U.K. and South Africa. Onkar says many of his clients shut shop and shifted to online businesses post the COVID-19 outbreak. This meant he had to cut down heavily on stock. “But the export units in India have benefited a great deal. Many clients from the U.S. and European countries have turned towards India post-COVID-19, from China. In fact, many export units have been overworked over the past couple of months. They are facing a workers’ crunch,” says the middle-aged businessman.

In the wake of COVID-19, big players with “deep pockets” and those willing to adapt to the changed scenario have survived in the garments business, much like in other businesses. “Increase in input costs, low demand and liquidity crunch have made it difficult for the small players to remain afloat. Banks are reluctant to sanction loans to small players fearing default. The raw material suppliers no longer deal in credit. The input cost has shot up with the rise in the price of raw material. The cost of fabric alone has gone up 35-40% over the past few months,” says Onkar.

For the first year after the national lockdown, Onkar’s company failed to meet the turnover for the previous year as orders from abroad stopped coming in. But he altered his business style and augmented his turnover to almost 1.5 times this year and increased the workforce by almost one-fourth. Instead of waiting for clients to come to him, as was the case before COVID-19, he now reaches out to them. “We visit them five to six times a year. It gave us an edge over our competitors from India, Pakistan and China who were reluctant to travel,” says Onkar.

Export performance

The impact of COVID-19 was felt by the readymade garments export industry from the end of 2019, when the virus hit countries like the U.S. and Europe. “While the major impact during the first wave was with regard to demand-side shocks like cancellation of orders, heavy discounting on exports by the buyers, and overall reduction in demand due to closure of retail chains in the Western markets, the supply-side shocks added to the problem during the second wave. The lockdowns in several apparel production hubs, restrictions on the mobility of workers, and other bottlenecks such as non-availability of labour, high freight charges and input cost added to the problem. Continuity of production became the major challenge. The overall impact of this can be seen in the export figures. Export performance in 2020-21 was $12.28 billion, a 20.8% decline from $15.50 billion the previous year,” says Narendra Goenka, Chairman, Apparel Export Promotion Council.

However, the situation on the exports front has improved considerably and is almost on par with the pre-COVID-19 levels, he says. “The preliminary export data up to January this year show that industry has nearly recovered to the pre-pandemic levels with an export performance of $12.68 billion in April-January 2021-22. Not only is there a growth of 33.3% against last year, it is also an indicator that apparel exports may surpass the 2019-20 export performance of $15.50 billion,” says Narendra.

As per AEPC membership data, there are 450 operational readymade garments exports units in Haryana. Also, Haryana’s share in total garments exports grew from 8.9% in 2016-17 to 11.2% in 2020-21. Of the total exports worth $17.38 billion in 2016-17, Haryana’s share was $1.55 billion. In 2020-21, though the absolute numbers went down, Haryana contributed $1.37 billion to the total export of $12.28 billion.

Manmohan Gaind, general-secretary, Manesar Industries Welfare Association, says the demand in the automotive and garments sector has slowly picked up, but production has remained low for different reasons. While in the automobile sector there is a shortage of semi-conductors, in the garments sector the demand for office wear and school uniforms has been at an all-time low. “Though the garment export firms, especially with clients in the U.S, are overworked, the overall employment situation remains grim,” says Manmohan.

The daily wagers

This is especially the case with daily wagers. Bimla and her husband, who live in Gurugram, used to work in the garments sector. They have been jobless for two months now. Bimla says the couple is turned away wherever they go seeking work. “We are a family of five with three children. We don’t have a ration card. We find it difficult to earn two square meals a day and need to go without food some days,” says Bimla, a native of Kanpur in Uttar Pradesh.

Raj Kishor, a migrant worker from Bihar’s Arrah, says he gets work for only 15-18 days a month compared to the 26 days before the national lockdown. There is no overtime as well. With the prices of vegetables, groceries and cooking gas going up, and with rent hitting the roof, Raj finds it difficult to make both ends meet. “My wife and I had a child last year, which means an additional financial burden of ₹500 per month. Sometimes I crave for dal bhaat and samosas from the roadside vendor, but I don’t have enough money for such luxuries now. I need to save every single rupee to survive,” says Raj.

Another migrant worker from Badaun, Gyan Mohammad, has stopped sending his children — aged 8, 10 and 13 years — to school so that he can cut down family expenses. “Schools have been shut for two years and the children were not learning much online. The prepaid recharge rates too are up, adding to the burden,” he says.

Then there are contractual workers, earning anything between ₹11,000 and ₹13,000 a month, who have also been hit badly, says Anita Yadav of Gurgaon Mahila Kamgaar Sangathan. The fall in production due to lack of demand has meant no overtime wages, which constituted 25-30% of the monthly income of contractual workers, and no increase in regular wages as well for the past two years.

Kiran, a contractual worker, had left her job in the garments unit a few months ago to work at an auto company in Gurugram’s Khandsa village. She had hoped for better wages, but there is no change in her condition. To make both ends meet, she has stopped sending her 11-year-old son for private tuitions. “I have also stopped giving milk to my son. Earlier we ate paneer twice a week, now we cannot afford even a vegetable dish some days,” says Kiran, who is from Saharanpur, U.P.

Stranded and helpless

Jalaluddin Ansari, member, Gurgaon Shramik Sangathan, says the majority of the garment companies did not pay a single rupee to their workers during the national lockdown. Landlords refused to waive or defer the room rents and grocery store owners decided among themselves to not sell groceries to the migrants on credit. In many cases, contractors also disappeared with the wages of the migrants, leaving them stranded and helpless.

During their interaction with garment workers across Khandsa, Udyog Vihar, Sarhaul and Kapashera, during the lockdown, the Sangathan activists found that most of the employers, barring a few big companies, paid wages only for the remaining eight days of March after the national lockdown was announced. And those who paid the workers for the lockdown period later deducted it from their salaries adjusting it as “advance payment”.

“Just 10-20% of the workforce in the garments sector in Gurugram is regular. The rest work on contract basis or as daily wagers. Even those on the rolls had to suffer, so the less said, the better, for the rest,” says Jalauddin.

Even after the lockdown was gradually relaxed in the first week of May 2020 and the factories allowed to work with a reduced workforce, the miseries of workers did not end. A large workforce staying in Delhi was not allowed to cross into Haryana for work as the State borders had been sealed. Desperate to work, men and women would walk several kilometres to cross over to Haryana from Delhi in the early hours of the day to escape the police. “Many women told us that they would get up at 2 a.m. to reach the factory before dawn. But there was no guarantee of work. Many had to return and would turn up again with renewed hope,” says Anita, recounting her interaction with women workers.

Sitting in his dimly lit office at his digital printing unit in Delhi, Rahul says he has no choice but to stay put despite the sluggish market and wait for the situation to improve. “I am already under heavy debt. Shutting down the unit is not an option for me. My sole hope is revival in demand. I can only hope that it happens before it is too late for me,” he says.

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