Updated: May 7, 2020 1:29:48 pm
The Covid-19 pandemic has forced the world of sports to a standstill and India’s Rs 2,000-crore sports goods manufacturing industry is also facing “an unprecedented slump” during what would otherwise be peak season. Running out of funds, the industry, whose hubs lie in Punjab’s Jalandhar and Uttar Pradesh’s Meerut, say only a financial rescue package will help them recover.
The timing of the lockdown couldn’t have been worse; here’s why
Manufacturers say the sports industry was preparing for the demand spike common in summers and the round-the-clock operations needed to fulfil the same. In fact, IPL season should be peak season, with cricket academies open and many summer camps on across the country.
Ajay Mahajan, Convenor (Jalandhar Zone) of PHD Chambers of Commerce and Industry (PHDCCI), says factories have been shut with production operations stopped halfway and containers full of shipments abandoned. “Now, after over a month, the future of our businesses looks grim.”
Almost 70 per cent of all sporting goods are manufactured in Jalandhar with different industries producing almost 318 sporting goods including cricket bats, balls, athletic goods, inflatable balls, racquets and fitness equipment. An estimated 5,00,000 people are employed nationally by the factories that conduct business worth over $800 million or Rs 5,600 crores in global sales annually. This year, both domestic sales and exports have been hit as nations imposed lockdowns.
“The national and international orders on which we were working on have been put on hold or cancelled. Payments have stopped,” explains Surinder Mahajan, owner of Apex Sporting Goods Corporation in Jalandhar.
The All India Sports Goods Manufacturers Federation says 60 per cent of all sports goods made in India are exported, of which Meerut contributes 45 per cent. Companies in the city are estimated to have lost at least Rs 200 crore in April alone, says Sumnesh Agarwal, secretary of the Sports Goods Export Promotion Council (SGEPC).
Home to 15 of the top manufacturers of sports equipment like Vats Sports, Stag and Sanspareils Greenlands (SG), the 3,000 firms in Meerut employ around 25,000 workers.
“My manufacturing unit (Premier Leggaurd Work) has clients in Australia, where the sports season starts in August. Production takes at least eight weeks and shipping takes six weeks. We are running short of time to save our businesses,” Agarwal said.
Why there’s little hope of a recovery
Pran Chaddha, a Jalandhar-based manufacturer who has been in the business for 55 years, says even after the lockdown there may not be a steep rise in sales. “Unfortunately, sports is still considered a luxury in India and in the middle of such a crisis, where people no longer have deep pockets, sports will take a back seat. It’s still a luxury, not a necessity,” he reasons.
Mahajan from PHDCCI says their biggest buyers are schools, universities, gyms and sports clubs, all of which are now shut.
Raj S, who owns small-scale manufacturing units in Chennai and Meerut, says post-lockdown manufacturers will need to clear existing stock. “We are also anticipating that it will take 3-6 months for people to go to grounds and start playing contact sports. Our industry survives on common people’s needs and demand for sports goods will not rise until all restrictions are lifted to play games,” he adds.
Chaddha sees an opportunity for indoor sports goods manufacturers. “People still need carrom boards, table tennis equipment and fitness accessories… People are ordering indoor sports goods online,” he says, adding that they will, however, not have the capacity to meet this demand after the lifting of the lockdown.
Even if there is a rise in demand, most factories in this sector have limited production capacity which makes them unable to cater to large orders. Manufacturers said they are wary of increasing capacity due to stringent labour laws.
Running out of cash and no workers
Manufacturers say reopening is a challenge given the absence of workers.
“Our units are run by migrant labourers from Bihar and Uttar Pradesh. On one hand, the government is coming up with a plan to partially restart production operations, while on the other hand, the MHA has asked states to make arrangements for migrant labourers’ return. What kind of planning is this?” asks Agarwal.
Manufacturers also questioned how they are expected to pay employees full salaries during lockdown given they are facing a cash crunch.
“We are a small industry and can’t survive long if we are made to pay full salaries for even three months,” says Mukesh Bassan, a manufacturer from Jalandhar. Another Meerut-based manufacturer said the government must release funds from the Employees’ State Insurance Corporation under the Pandemic Act.
Tarun Dewan, executive director of SGEPC, says the government needs to plan a roadmap for small and medium enterprises. He elaborates: “A special economic package is needed or at least zero-interest loans to the small scale industry will be of great help during this great depression.”
📣 The Indian Express is now on Telegram. Click here to join our channel (@indianexpress) and stay updated with the latest headlines
- The Indian Express website has been rated GREEN for its credibility and trustworthiness by Newsguard, a global service that rates news sources for their journalistic standards.