India must grab the opportunity for PPE exports

Rohit Choraria | Updated on May 20, 2020

India’s capability to manufacture PPE does not just reduce import dependency, but also opens up the global market for exports. It must learn from other nations to take advantage of this opportunity quickly

Today, the apparel industry is contributing in the fight against the Covid-19 crisis with the manufacture of PPE (personal protective equipment) for health and sanitation professionals. While indigenous manufacture of PPE enables forex savings, the apparel industry is yet to adequately embark on its exports.

This is in tune with PM Modi’s recent address to the nation, where he talked about turning the Covid-19 crisis into an opportunity. He specifically referred to how the production of PPE kits in the country has exploded from almost negligible amount to two lakh units daily, over the span of a few weeks. Later, a tweet from the Textiles Minister announced that the apparel industry now makes three lakh PPEs per day, which highlights its capability to rapidly hike production. For a country with no Covid-19 worthy PPE on March 1, this is a remarkable achievement.

The government has publicly proclaimed that it plans to procure two crore PPE kits from the country’s apparel industry. In the event that the apparel industry did not step up to the challenge the country, would have expended $300 million in PPE imports. Clearly, this push for indigenous PPE manufacture amounts to import substitution.

Market opportunity

Apart from the apparel industry’s ability to save forex, its potential to export PPEs merits examination in an otherwise gloomy economic environment. The entrepreneurial apparel industry is prepared to play a key role in the global market for PPEs, which is estimated to be at over $60 billion over the next five years, according to the Apparel Export Promotion Council of India. While demand for PPEs peaks at this point in time, India cannot afford to lose this market opportunity, which would only shrink over the next couple of years.

Today the government has disallowed PPE exports in order to meet domestic demand first. This leaves the large global market for PPEs open to countries like China, Bangladesh and Vietnam, with a key competitor missing. India’s vision should now shift from “first local-then global” to “local with global”. Production capacities across 95 approved PPE producers, are still available to the extent of 30 per cent, even after factoring social distancing guidelines.

Besides, there are 300 certified producers who are ready to take orders, as per the Textile Ministry. This reflects significant capacities which await utilisation without any impact on domestic PPE requirements. The key reason for such massive production capability is due to the lack of orders for fashion apparel from foreign markets in the wake of pandemic restrictions in those countries.

Export policy

Today, the country has a combination of available spare production capacities and addressable global market, but no market access due to government restrictions. India should examine the export policy of Vietnam and Bangladesh, which are key competitors in the global market.

Vietnam responded early to the pandemic, and reported its numbers of infections under control, which gave it the relative stability to aid other countries. In mid-April the world media was abuzz talking of how Covid turned Vietnam from an aid recipient to a donor. Five European ambassadors stood, in business attire and surgical masks, on a stage in Hanoi and greeted Vietnamese officials who announced they were donating face masks to European nations. All was not charity. For example, Vietnam and USAID have been engaging actively on what supplies Hanoi can manufacture.

The Embassy of Vietnam in Washington has established a channel of communication with the Center for Disease Control and Prevention and the US Department of Health and Human Services. The US Federal Emergency Management Agency has created an “air bridge” to quickly get medical supplies like 2.25 mm PPEs exported from Vietnam. Interestingly, India is also part of the US “air bridge” initiative.

Bangladesh has also aggressively prospected global business from countries such as the US, Nepal, Sri Lanka and Kuwait, while tackling the pandemic. It has faced difficulty in procuring specialised fabric required for some global requirements, but is working with China, where lead times have now increased to 15-20 days due to flight restrictions.

India cannot afford to ignore global market opportunities, which will shrink with each passing day due to myopic government restrictions. India should therefore consider the economic and political dividends that timely PPE exports will generate in the post Covid era.

The Indian apparel industry has demonstrated extraordinary enterprise and agility through its ability to rejig large production facilities to manufacture PPEs. This required re-purposing their production lines amidst a nationwide lockdown where material, labour and supply chains were distorted. For apparel industry leaders, this challenge proved a complex exercise in the fight against the deadly war against Covid-19. At this stage, to lose out on an attractive global business opportunity would be foolish on the part of foreign trade policymakers.

India prides itself on its self-reliance, but also says it should not be mistaken for an isolationist foreign trade policy. The need of the hour is to initiate PPE exports that would not disturb domestic demands due to adequately available spare capacity. This would make policymakers walk the talk.

The writer is an Adjunct Faculty at Christ deemed to be University, Bengaluru

Published on May 20, 2020

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