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India Clothing Maker Shutters Unit, Leaving 1,200 Workers Unemployed

One of India’s largest manufacturers and exporters of clothing has shuttered a key facility, leaving 1,200 garment workers unemployed, according to local media reports.

Gokaldas Exports, whose clients include major Western brands such as Adidas, Gap, Nike and Marks & Spencer, shut down its unit in the southwest state of Karnataka with effect Monday, a result, it said in a statement, of the “reduction and cancelation of orders from its customers based out of key markets consequent to the COVID-19 pandemic.”

One of Karnataka’s oldest garment manufacturers, Gokaldas employs roughly 25,000 people, most of them women, across 20 units. Reuters reported last week that Gokaldas lost 50 percent of its production capacity in the first quarter because of India’s lockdown to prevent the spread of the COVID-19 contagion. Restrictions began loosening this week, with places of worship, restaurants and shopping malls reopening, despite the country outstripping both Italy and Spain over the weekend to become the fifth-worst country affected by the pandemic. The nation of 1.3 billion has to date reported 267,000 positive coronavirus cases and more than 7,400 COVID-19-related deaths.

Despite fears of the virus, hundreds of former workers have gathered outside the factory to protest the layoff and lack of renumeration. One of them told the New Indian Express that Gokaldas had been paying only half-day salaries since March 23. Starvation, rather than COVID-19, is the more immediate concern.

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Labor groups say the sudden layoffs by Gokaldas, which reaped 2,380 lakh rupees ($3.1 million) in profit before interest, tax and depreciation in the financial year ending March 31, 2019, according to its annual report, are illegal per the 1947 Industrial Disputes Act.

“During the negotiations, the management was not even ready to listen to the workers’ demand,” J.R. Jayaram, treasurer of Karnataka-based Garment and Textile Workers Union, told NewsClick. “Whereas, the state authorities have told the workers that proper legal action will be taken against the company.”

Following news of the factory’s closure, the company’s stock fell by 2 percent on the Bombay Stock Exchange.

Like in neighboring Bangladesh, India’s garment sector has suffered massive blows amid the ongoing pandemic.

The government recently announced a package of 20 lakh crore rupees ($307 billion) to provide free food, loans, credit and cash relief for certain segments of workers and to generate employment for migrants returning to rural areas. But the package offers “no specific support” for garment and textile workers and falls short of stemming the “humanitarian crisis unfolding in the country,” especially in the wake of uncertainty around wage payments during the lockdown period, the Asian Floor Wage Alliance wrote in a report late May.

“Though there was an advisory from the Union Ministry of Home Affairs that employers should pay full wages and not resort to layoffs, it was not implemented by many firms and the advisory was withdrawn in a few weeks,” the organization said.

In April, the Garments Exporters and Manufacturers Association (GEMA) said factories were “not in a position” to pay wages for April and May. “We humbly wish to inform that we are not in a position to pay wages for the months of April and May despite our best intention,” GEMA president Vijay Jindal wrote in an open letter to Prime Minister Narendra Modi and state chief ministers.

India’s garment sector, the fifth-largest apparel exporter globally, employs more than 12 million people in factories, though millions more—mostly women and girls from marginalized communities—work in informal, home-based settings, according to a 2019 University of California, Berkeley study. Nearly half (47 percent) of the country’s total apparel exports, which exceeded $16 billion in 2019, are earmarked for the United States and the European Union.