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Writing’s on the Wall for India’s Apparel Exporters: Week Ahead

India is facing a second wave of Covid-19 cases, new health data shows.

The health ministry in India on Friday reported more than 200,000 new cases, marking the eighth record daily increase in coronavirus infections over the past nine days and stoking fears that the country is in the midst of a second wave.

Last year, apparel exporters suffered during India’s five-month Covid lockdown. Production was hit hard as workers stayed home from their jobs at urban manufacturing hubs.

Covid cases peaked in September before declining, but new cases—believed to be mostly from mutations—began rising last month. The weeks-long ancient Hindu “Festival of Colors” celebrating spring’s arrival has done little to help.

“India’s second wave of infections has been worse than the initial wave with daily confirmed cases at record highs. In just the last two days, India has reported over 200,000 infections each day, and on a rolling average basis, around 175,000 new daily confirmed cases,” said Brendan McKenna, economist at Wells Fargo Securities. “While Prime Minister [Narendra] Modi has been hesitant to implement another nationwide lockdown, local governments have imposed restrictions of their own.”

Local officials in Maharashtra, a highly populous state in India and where the financial capital Mumbai is located, have ordered businesses to close for 15 days and banned gatherings. And capital city New Delhi, an apparel exporting hub, has similar restrictions in place as well. Other cities have followed suit with their own curfews. Restrictions could become even more stringent if the daily infection rate climbs higher.

Epidemiologist Giridhara Babu from the Public Health Foundation of India told NPR that the variants emerging in India are “probably the biggest reason why the speed at which the cases are rising is almost exponential.” Time around, most people appear to be asymptomatic, he added.

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McKenna pointed to local reports noting a “new migration out of Mumbai, New Delhi and other hubs back toward more rural towns and villages” now that businesses in major Indian cities have been forced to close.

During last year’s first wave, the country’s apparel industry was on the losing end as retailers canceled or pulled back on orders. In India, apparel manufacturers in particular were also hit by an exodus out of the cities, which led to a shortage of factory workers. If the country can’t stem the infection rate soon enough this time around, apparel exporters could see history repeating itself again.

McKenna sees elevated Covid cases, new lockdown measures and the migration out of major hubs driving short-term hurdles to India’s economic recovery.