Garment exporters worried about fall in global orders

Garment makers in Tirupur and Noida are seeing up to a 25% reduction in fresh orders from global brands like Mango, Zara, H&M after they suspended operations in Russia following its invasion of Ukraine. Spanish fashion retailer Inditex – which owns Zara – has halted trading in Russia, closing its 502 shops and stopping online sales a fortnight ago.

H&M has suspended operations in Russia, while Spain’s second-largest fashion retailer Mango has also temporarily closed its 120 shops in Russia.

“Garments were routed to Russia through Spain,” said Lalit Thukral, president, Noida Apparel Export Cluster. After all the global brands suspended operations, fresh orders have come down by 15%, he added. “We are a bit worried regarding payments that have got stuck due to the Russia-Ukraine war,” Thukral said. The apparel export cluster in Noida houses 3,000 units, with an annual turnover of nearly ₹30,000 crore.

“The Russia-Ukraine war and the uncertainty around it have come at a time when the garment exporters were gradually recovering from the business impact of Covid-19,” said Raja Shanmugam, president, Tirupur Exporters’ Association. Fresh orders from brands like Zara, Mango, H&M have dropped 25% since the invasion, he said. “The freight rates have started climbing further due to geopolitical tension and exporters are bleeding,” Shanmugam said.

Shipments through the Black Sea have also come to a grinding halt and exporters are now sending garments by air. The air freight rate has shot up to ₹500 per kg from ₹150 per kg. “Buyers will not pay for rising freight rates,” said Thukral. Tirupur houses 2,000 knitwear garment export units and another 18,000 ancillary units that supply to knitwear firms.

“We have no worries about Q4 of FY22. All the orders have been locked and everything is in place. We are worried aboutQ1 of FY23. We do not know how long the war will continue and how the world will react to it,” said Shanmugam.

Tirupur is the biggest garment manufacturing hub in the country and its share in India’s knitwear exports is more than 55%.

In the current financial year, Tirupur exporters are expecting to touch ₹33,000 crore worth exports. They have targeted ₹40,000 crore in exports in FY23.

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