Coronavirus outbreak likely to hit yarn, garment exporters

By: |
February 07, 2020 1:59 AM

Chinese buyers generally begin their annual sourcing from Indian exporters in January every year.

Coronavirus outbreak, Indian exporters, readymade garment, cotton yarn, China, TEA, trade transactionChina has curtailed movement of people in some parts of the country on a temporary basis.

Indian exporters/importers of readymade garment, cotton yarn, fibres and fabric are likely to be impacted due to the outbreak of coronavirus. With toll crossing over 550 across the globe and victims mostly in China, any further prolong of the outbreak will take a toll on thousands of crores of business transactions being done annually between buyers and sellers in the textile sector of the two countries.

Chinese buyers generally begin their annual sourcing from Indian exporters in January every year. However, this time due to coronavirus, buyers from China have not come forward so far for any trade transaction. China has curtailed movement of people in some parts of the country on a temporary basis. It remains to be seen how things will turn out, going forward.

“Any prolonging of this dreadful disease will cast an impact on our cotton yarn export business,” said an official of Southern India Mills’ Association (Sima), a leading mills association in India. Similarly, Indian exporters also export viscose, polyester yarn and fibre to some extent to China, he said.

A spokesperson of Tirupur Exporters’ Association (TEA) while expressing concern over the outbreak said: “Nationally, exporters of readymade garments import over Rs 1,000 crore worth accessories such as buttons, metal buttons, zips, hangers and needles, among other items, from China as they are nearly 40% cheaper than India and other countries. Though the exporters don’t see any immediate impact but if the outbreak continues for some time, they need to look at an alternate sourcing of these accessories, which in turn may increase the finished goods cost by 3% to 5%.”

A spokesperson of Texprocil, the apex body for exports, said: “At this point of time, it is a bit of concern for us. The coronavirus is an unexpected disruption to the Indian cotton yarn and fabric exporters. On an average, India exports 90 million kg of yarn a month and China alone imports 30% from India a month. At an average price of $3.5 a kg (around Rs 220 a kg), one can count what would be the impact if coronavirus (outbreak) prolongs further.”

The TEA spokesperson further said the European buyers, who normally begin negotiating with the garment exporters of India, Bangladesh and Indonesia for their annual requirements in January at Hong Kong, had cancelled their visit at the trading hub of Asia due to coronavirus as Hong Kong, too, had been affected by the deadly disease. The exporters have been asked to trade through videoconferencing, which many exporters in India find it difficult to bargain for a better price of their products.”

According to the Sima spokesperson, with China further extending its holiday for a week or 10 days, they expect the trade negogiations between China traders and Indian exporters to get further delayed. “With the impact of coronavirus, the Chinese buyers may go for renegotiation on prices, which may again impact our business.” “Though it is bit of grave concern at this point of time, but we expect normalcy will come to China as early as possible and the exports will begin as usual over the years as we see demand pick up and China will continue to be the largest market for us,” the Texprocil spokesperson added.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Paytm, PolicyBazaar among 35 IPOs in Dec quarter; here’s how primary market will perform in coming weeks
2Vodafone Idea, PNB among volume toppers on NSE; IRCTC, Tech Mahindra record highest traded value
3SBI, Tech Mahindra among 142 stocks to hit 52-week highs on BSE; 24 shares at 52-week lows