Besides handicrafts, the garment and carpet exporters are also feeling the impact of the economic woes of the western world. Representatives from the sectors said that they expect the slump to continue in 2023 as well and the exporters are adopting strategies for survival until things change for the better.
Dileep Baid, vice-chairman, Exports Promotion Council for Handicrafts, said, “Companies will come under stress if the negative trend prolongs. Exporters have large inventories as big buyers in the US and Europe have either cancelled orders or reduced the size of offtake.”
Baid said that the Christmas sales figures will be key to watch out for. “If the sales are not good, buyers will desist from placing orders and are unlikely to lift fully the orders placed earlier.”
Assessing the situation that has been building up since April this year, Baid said during the Covid pandemic the US government doled out monetary benefits to its people. This increased the demand for handicrafts. Buyers placed large orders not only to meet the increased demand but also de-risk the container shortage crisis witnessed then.
But now, he said, that the countries in Europe and the US have record high inflation and the central banks have increased interest rates. “The buyers did not expect a sudden slump in demand. They had overstocked, up to over 42%. That’s why they started cancelling or short-lifting the orders beginning from April,” added Baid.
Baid said handicrafts makers in the state have put on hold all their expansion plans and reduced the operations. “The priority now is to survive and keeping costs under control is what many are doing.”
It is also impacting the jobs. Workers are not required to report to duty every day. Some are asking their employees to come 3-4 days a week. Those who had three units are running two now.
The slowdown in garment exports, if not as bad, is causing worry lines to emerge. Fabric costs have shot up by over 50% in the past two years, which is making the slump in exports worse.
Dalpat Lodha, patron of Association of Garment Exporters Sitapura (AGES), said, “Exports to markets like the US and Europe has fallen. The steady and sharp rise in the cost of fabrics is adding fuel to the fire. The economies in the Western world is in bad shape. Exports from all countries have suffered.”
However, Lodha said, “If the government interferes and the prices of fabric comes down, it would help the garment industry compete better with countries like Bangladesh and help us fight the slowdown.” He said if the Covid situation in China continues for a longer period, some China-centric buyers will shift to India.
The carpet industry, which has withstood the headwinds so far, has started wilting under the new pressures. The hand-knotted segment is facing the severity of the slowdown with large-scale job losses.
