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Global Recession Hits South Asia's Apparel Industry


South Asia's export based apparel industry is reeling under the impact of the global recession as demand for clothing from Western countries slows down. The industry is one of the biggest employers in this region.

For the last three years, 40-year-old Phekan sewed buttons on cotton shirts in a small factory in Gurgaon, on the outskirts of New Delhi earning about $100 a month. But she lost her job earlier this month after the European retailer buying the shirts slashed orders.

Phekan is worried how she will continue to live in the city while searching for another job.

Phekan says her landlord will demand rent on the first of the month, and she does not know how she will pay the money.

She is among tens of thousands of workers in India, Sri Lanka and Bangladesh who have lost jobs as the recession in the West slows down orders for garments. These countries are among several Asian countries where the apparel industry boomed in recent years as demand in the United States and Europe grew steadily.

Raghav Gupta, President at India-based consultancy Technopak Advisors, says bigger manufacturers are able to absorb the impact of the slowdown, but many smaller units are badly hit.

"The bigger people, because economies of scale and cost pressures are important, are still going to grow, but it is small companies which don't have economies of scale, they might go out of business," Gupta said.

The industry is impacted slightly less in India, where strong domestic consumption is providing a market for manufacturers. But the export dependant industries in Bangladesh and Sri Lanka have been impacted more severely by shrinking retail sales in the West.

According to the Bangladesh Garment Manufacturers and Exporters Association, an estimated 25 percent of orders have been cancelled by Western buyers.

The Association's Vice President, Shafiul Islam Mohiuddin, says the industry was hoping to exceed last year's exports which totaled over $10 billion, but is unlikely to meet the target.

"The export goal initial in this year was $13 billion, and we are little scared whether we will be able to achieve that goal," he said. "Buyers are delaying the goods because of falling demand. We are struggling for survival in these bad days."

The textile and garment factories in the region provide jobs to tens of millions of people, especially women, and are the biggest employers in the region after agriculture.

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