A strict lockdown in Shanghai is making Ludhiana's hosiery industry sweat

With supply of raw materials from Shanghai badly hit because of strict lockdowns, the production of winter wear in India's hosiery capital has come to a halt

On Monday, China announced a relaxation in the two-month long lockdown imposed on Shanghai, a city of 25 million residents. But it won't just be the residents of Shanghai who will breathe a sigh of relief because the industrial city of Ludhiana is tied to Shanghai's fate as well.

Ludhiana dominates India's hosiery industry and depends upon China for raw material. The lockdown in Shanghai has affected this hosiery industry in Ludhiana badly, reports Hindi daily Dainik Bhaskar.

According to Dainik Bhaskar, the Ludhiana-based hosiery industry accounts for 70 per cent of India's winterwear production and depends upon Shanghai for 80 per cent of its raw materials.

Shangai has been under lockdown for nearly two months as it faced one of China's worst Covid-19 outbreaks. With China sticking to its zero-Covid policy, industry has been badly affected. According to a report (https://www.scmp.com/economy/china-economy/article/3179461/chinas-zero-covid-policy-has-some-manufacturers-asking-should) in the South China Morning Post, this zero-Covid policy has pushed manufacturers in China to ask "whether they should stay or go". 

The ripple effect of this strict lockdown has been felt in places like Ludhiana as well. Bhaskar reports that orders for raw materials placed in March have not been cleared yet. This has affected delivery which will be delayed by at three to five months.

The manufacturing of winter wear in Ludhiana has hit pause. Sudarshan Jain, the chief of the Apparel Manufacturers Association, told Bhaskar that most of the units in Shanghai are shut and orders are delayed.

What does this mean for the industry?

Since Ludhiana is heavily dependent on Shanghai for raw materials, and India on Ludhiana for winter wear, the delay would mean that people here may find themselves paying 25 per cent extra for winter wear this year. A major reason for this issue is that the raw material that is sourced from Shanghai is not manufactured anywhere in India. 

Now that the orders are delayed till July, the supply of final product is likely to take a hit, which will result in higher price of the finished prodcut.

What has been happening in Shanghai?

Shanghai imposed a city-wide lockdown on 25 million residents on April 1 to curb the spread of Covid-19. The authorities imposed harsh measures that caused widespread public anger over issues such as crowded quarantine centres, difficulties in accessing food and loss of income. 

However, Shanghai authorities will lift the city's two-month-long lockdown from June 1, allowing private cars including taxis back on to the roads and people to freely move in and out of low-risk housing compounds.

Bus and rail transport will also resume basic operations from June 1, including a ferry that connects districts separated by the city's Huangpu river, the Shanghai city government said.