Ahmedabad: Textile markets seek buyers ahead of Diwali

With just weeks left for Diwali, fabric and garment traders in Ahmedabad are worried as markets are yet to witness normal footfalls. They say that the upcoming week will be crucial for the earnings in the season. They said that demand has dropped by about 25% this year in local markets as well as in other states. Ahmedabad is a major hub for supply of garments and fabrics to almost all the states in the country and therefore a barometer of the demand in the sector.

“Footfalls are just trickling in. The demand and buying is not as per our expectation. This week is to watch out for. Post Diwali, marriage season would set in on November 20. We can expect buying then as well,” said Kirit Patel, president of Panchkuwa Kapad Market, a wholesale market for fabrics catering to various states. Patel caters to Maharashtra and Chhattisgarh and said that there is a fall in demand, irrespective of states.

He said that retail markets are key as they create demand for wholesale markets and thereby for manufacturers. He informed that sales of fabrics dropped by 60% in August this year compared to the previous year. However, it grew 20% in September. “All eyes are now on October. We would be happy if sales of previous year are maintained. Anyway, sales would be lower by 25-30% on an annual basis,” said Patel.

Manufacturers of garments said they had factored the drop in the demand very early and therefore tuned accordingly or else would be worried about the pile-up in the inventory. “We had reduced production by about 35-40% about 12-18 months ago. So we can sell what we have produced. The drop in demand is uniform across the states,” said Arpan Shah, vice president of Gujarat Garment Manufacturers Association (GGMA). 

Shah said that conducive rains earlier during Monsoon had raised hopes of a rise in demand but the last spell has ruined crops and resulted in floods in many parts of country. “In Bihar, sherwanis displayed in front of shops were half-submerged in floodwater. We do not expect payments to come soon from Bihar. With standing crops getting destroyed due to rains and floods, farmers will earn less and rural demand will take a severe hit,” Shah told DNA.

Gaurang Bhagat, president of Maskati Market Kapad Mahajan said that payment cycles have already extended to over 120 days, an indication that goods are not sold in retail market. “There are undated cheques lying with the traders. But they have no cash. Rotation of money has drastically decreased in market. Businesses have been consistently slowing down since 2015-16. There is a sustained contraction in demand,” said Bhagat.

Changes in consumer behaviour and choices have also hurt markets. “Fabrics are no longer in demand. Retailers are now stocking both ready-made garments and fabrics. Consumers do not have the patience to buy suiting and shirting, give it to the tailor for stitching. 

Now, they do not have the luxury of time. They are buying ready-made garments,” said Patel. Moreover, the trend of online shopping among the young generation has hurt footfalls in shops and showrooms. The recent festival discount by Amazon and Flipkart has pre-empted the footfalls. Those who would have come to shops, have made deals online,” said Patel.

Shah said that 12% GST is levied on garments priced over Rs 1,000. Others have five per cent GST. So manufactureres are tweaking quality, rolled back on value addition. This has caused job losses in the sector, reduction is outsourcing for value addition. “In addition to textile and garments, other sectors are also facing a slowdown. There are layoffs, salaries have stagnated, causing the retail demand to drop. The government should take immediate and concrete steps to revive consumer demand,” he said.