Noida-based garment exporters feel the heat as Russia-Ukraine conflict drags on

With US sanctions in place, the orders from Europe and the USA brands, which had stores in Russia, have dried up and for many traders their payments for orders already completed are stuck

Garment exporters in the state are facing a crisis as the Russia –Ukraine conflict stretches on. The war has led to the cancellation of many orders from America and Europe and for many of the exporters their payments for orders already fulfilled are stuck.

For around 1200 garment exporters of Uttar Pradesh, mostly from Noida, the RussiaUkraine conflict has dealt a serious blow to their business. Exporters of the Noida claim that the business loss (orders) can be pegged at around ₹3000 crore, and that is mostly due to the cancellation of orders from America and Europe as big garment brands of these two regions have closed their showrooms in Russia.

Rajeev Bansal, national vicepresident of Indian Industries Association (IIA), pointed out that export orders have already come down by 10%.

“All orders for garment showrooms in Russia of America-Europe based garment companies have been cancelled. These companies have shut down their business altogether in Russia,” added Bansal.

“Actual business loss cannot be estimated as the war has stretched far too long and is still going on,” Bansal pointed out.

Now, the increased price of diesel has led to an increase in the overall cost of transporting raw materials, and another problem being confronted by the exporters is related to stuck payments for orders that have already been fulfilled.

“After the US imposed sanctions on Russia, rouble (Russian currency) cannot be converted into US dollars.

Exporters used to get payments in US Dollars, Euro or British pound but now, due to sanctions, payments from Russia are stuck,” said Manmohan Agarwal, senior office-bearer, IIA.

All trade agreements used to be in dollars for payments between Indian and Russian traders.

IIA is now hoping for the Union government to step in and rescue the traders. One of the main demands of IIA is to start a rupee–rouble payment system at the earliest for the convenience of exporters.

Around 80% of garment export from Noida is to the US, Europe and Britain, while around 20% is to Ukraine, South Africa and other countries.

It may be pointed out that the rupee-rial trade mechanism is already in practice between India and Iran after the US imposed sanctions on Iran. All trade between India and Iran is being carried out in rupee and Iranian rial.