15 million export jobs may possibly succumb to Covid blows

Collected
A lot more than 15 million jobs could be lost found in India’s export sector because of half of most orders getting cancelled and systems struggling to repay loans as a result of Covid-19 pandemic and the ensuing lockdown, the apex body of exporters said in Friday.

The cancellations and postponement of shipments have eroded packing credits and impacted exporters’ fund-liquidity position as cash flows have completely dry out.

“With cancellation of over 50% of orders and gloomy forecast for future years, we expect 15 million job losses in exports and increasing NPAs (nonperforming assets) amidst exporting units, hitting the market extremely badly,” said Sharad Kumar Saraf, president, Federation of Indian Export Organisations (FIEO).

Most of the retrenchment might maintain labour-intensive sectors such as leather, gems and jewellery, handicrafts and textiles.

The apparel exports sector estimates 2.5-3 million job losses because of order cancellations and clients not clearing dues. “We expect around 2.5-3 million jobs both direct and indirect to get lost as a result of order cancellations and buyers not clearing our dues,” said Apparel Export Promotion Council (AEPC) chairman A Sakthivel.

The apparel sector employs about 12.9 million persons and about 70% of clothing units are MSMEs.

As the handicraft sector has pegged job losses at 2 million, a representative of the gems and jewellery export sector said that there will be retrenchment even though the estimate is yet to be finalised.

‘India is Losing Market segments to China’
The engineering exports sector could lose around 50,000-75,000 jobs.

The textiles and garments sector employs around 32 million people. The bulk of this job is unorganised and features workers on deal, working through labour agencies, long lasting and temporary staff. It's the second greatest employer after agriculture.

Sakthivel said labour is the largest expense in the market, with wages amounting to 25-30% of the price of production. “Further, units operate at slim margins of 3-4% and are completely reliant on export benefits granted by the federal government,” he explained. These estimates come days after the International Labour Organisation explained about 400 million personnel in India’s informal overall economy are at risk of dropping deeper into poverty through the Covid-19 crisis.

“We are kept with very (few) orders and if factories aren't allowed to utilize a minimum employees to execute them (in a) timely (manner), many of them will suffer irreparable losses and bringing them to the brink of closure as they are saddled with fixed costs, which regardless must be absorbed by them,” Saraf said.

He said India is losing marketplaces to China as it has resumed function and said the country had a need to restart factories immediately. “Tiny economies like Bangladesh and Sri Lanka also have announced relief deals,” he added.

Calling intended for a balance between lifestyle and livelihood, Saraf asked the government to right away announce a relief package for exports. FIEO has asked for export-related manufacturing to be allowed to resume promptly with the very least workforce adhering to safeness, sanitisation and social-distancing norms.

It suggested interest-free performing capital term loans to exporters to covers the cost of wages, local rental and utilities. In addition, it asked for waivers on EPF and ESIC obligations for 90 days from March to Might.

The grouping also sought extension of pre- and post-shipment credit by 90-180 times on maturity, rollover of forward cover without interest and penalty, automatic enhancement of limit by 25% to handle liquidity challenges and extension of interest equalisation benefits.

A good representative of the cotton textile industry said layoffs could be avoided if banks are lenient in supplying working capital to the sector and offer support when agreements in forex collapse.

“The issue of layoffs may become serious if banks do not show forbearance,” the individual said. “That is crucial consequently that we are able to retain labour specifically because they're trained labour.”

This an opportunity for India to mitigate the risks associated with goods from China and capture market from competitors such as for example China, Bangladesh and Vietnam, the person said.
Source: https://economictimes.indiatimes.com

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