Rreadymade garment exports dropped around 4.51 per cent in February 2020. COVID-19 outbreak is expected to impact exports for the next few months and has impacted sentiment in the European market — the largest for Indian exporters. Recent trends in US apparel imports have also been discouraging. For orders placed, delivery is taking much more time than usual. This is the primary reason for the fall in exports. As most countries are under lockdown, stores are shut and people don’t go out and stay at home. The drop is mainly due to weak buying and many customers’ going bankrupt or witnessing lower sales.

Indian apparel exporters expect a correction of around 100 to 150 bps in their operating profitability in fiscal ’20. This is expected to result in a moderation in debt coverage metrics. The impact is likely to be more pronounced for leveraged and smaller companies, with limited bargaining power with customers, and modest liquidity cushion.

When the outbreak started in China, initially it was looking like an opportunity for Indian exporters. This was because European customers, who were traditionally sourcing from China, started discussions with Indian exporters for new orders. But ever since the virus started spreading to Europe, things have turned upside down.