Part 2 of 4 in our research series
For businesses and nations alike, the coronavirus pandemic is the greatest challenge they are likely to have faced in living memory. No economy is immune to it.
However, as high-income countries absorb the virus’ first major blows, the question arises of how low-income countries will fare when their own outbreaks begin to spike. This article combines the latest data with industry insights to paint a portrait of how COVID-19 may play out in India — a country home to 1.38 billion people packed in densely populated cities.
At the time of writing, the global number of coronavirus cases has passed 2.46 million, and the death toll has passed 169,000. The USA currently has the most cases, followed by other high-income countries like Spain, Italy, France, Germany, and the UK. In terms of brands and retailers, these countries house the bulk of storefronts. However, each major brand relies on a global supply chain: a vast, interconnected network of factories and vendors that manufactures their products in countries like India. Because large numbers of workers gather each day to earn their living in these facilities, they threaten to become a hotbed for new outbreaks of COVID-19.
In India, several factors have set the stage for tragedy on an unimaginable scale — tragedy that brands and retailers can help prevent by making their supply chains safe for returning workers.
Factor 1: Unfortunate timing
Part of what makes this situation so dire is the unfortunate chronology of events.
It has started with high-income nations. These countries are currently either approaching their peaks or beginning their long, slow recovery from them. Economically speaking, storefronts are shut down, and brands and retailers are waiting for the cue to open back up. This is expected to happen sometime in the coming months. At the same time, places of production such as India are economically tied to these countries, and many factories have shut down operations due to a lack of sales at storefronts. The virus has not yet begun to spike in India and lockdown measures are still in effect.
Storefronts will then begin to open in the near future. This will result in a surge in sales and a consequent surge in demand for factories to reopen. However, due to the staggered nature of outbreaks across the globe, this is likely to occur just as the virus is beginning to peak in India. This scenario would see workers being called back to work just as it’s most vital for them to maintain social distancing.
Factor 2: Economic realities
In India, reopening a factory during the peaks of contagion is hardly an irresponsible choice — it is likely of absolute economic necessity. A high-income country may have the good fortune of a governmental disaster recovery plan, stimulus packages, and salary replacement checks. However, resources are limited in India. Even the world’s strongest economies have taken a nosedive during this pandemic, with the USA reporting large-scale unemployment. The damage will be more devastating in India, where the average monthly income is just $168. Many workers in the country live day to day, and their economic reality is that they need income for food and rent.
When factories reopen, they will face the terrible choice of risking exposure to COVID-19 or facing starvation. The answer is obvious.
The New York Times notes that, despite the fact that the virus migrated west to high-income countries after originating in Asia, it is “at risk of ricocheting back.” When it does take root in India’s colossal population, there is a potential for nearly unprecedented disaster.
Factor 3: Weak healthcare
The struggles that healthcare systems have faced in high-income countries are telling. The World Health Organization (WHO) ranks healthcare systems by a parameter called the Efficiency Index, with a higher index indicating better healthcare. France and Italy have the best healthcare systems in the world by this metric, with rankings of #1 and #2 (Efficiency Indices of 0.994 and 0.991), respectively. However, these healthcare systems have all but failed during their countries’ outbreaks. In France, hospitals have been overwhelmed by the number of COVID-19 patients and have had to ship patients by train to other healthcare facilities.8 The death rate in Italy is currently a staggering 13.3%, as many people have been unable to receive life-saving care due to saturated hospitals.
By comparison, India’s healthcare system is ranked 112 out of 191 by the WHO and has an Efficiency Index of just 0.617.7 This alone puts them at a disadvantage — but combined with dense populations and high poverty rates, their risk is especially grave.
Factor 4: Help isn’t on the way
When ebola broke out in 2014, the world stepped in.10,11 The G20 mobilized and took action to contain the outbreak; hence, it seems reasonable to hope for a similar response to large-scale COVID-19 outbreaks in fragile nations and emerging markets.
However, the recent virtual G20 summit did not bode well for such aid. Although the organization released a statement of unity and support, no concrete measures for assistance have yet been issued.
Foreign investments in manufacturing countries are not a reliable source of support either, as disinvestment has outpaced even the virus, with capital placed in safer locations like US government bonds and cash. While last year saw a net $79-billion influx into emerging markets, $70 billion in investment money has disappeared from those markets in the past two months alone.
Factor 5: Low probability of a positive outcome
Analysts predict three possible outcomes for global containment of the COVID-19 virus, which include outcomes for poverty:
The first is outcome global containment, which sees periodic relaxation and reimplementation of global containment measures. Healthcare systems are mostly able to manage the influx of patients in this scenario. However, those in poverty become poorer, and humanitarian aid is reduced. The probability of this scenario is very low.
The second is partial containment, in which high-income countries largely weather the crisis and middle- to low-income countries see high death tolls and hard economic hits. Poverty worsens and humanitarian aid is reduced further. This scenario has a moderate probability.
The final outcome is limited containment. In this scenario, death rates increase sharply worldwide, shutdowns are frequent, totalitarian regimes repress their populations, and poverty skyrockets. This leads to civil unrest and little humanitarian aid. The probability of this outcome is moderate.
Note that in all three scenarios poverty worsens. For our supply chain partners in India and elsewhere, each of these outcomes is grim — but as brands and retailers, we have an opportunity to make our facilities safe for returning workers before they reopen. This move is absolutely critical in India, a country with a unique set of conditions currently working against its COVID-19 prospects.
India: a closer look
Despite its vast land area, India’s population density is still remarkably high at 464 people per square kilometer (compare with 153 people per square kilometer in China). India is a low-income country, with a $2.9 trillion GDP yielding a GDP per capita of just $2,172.16 Its Human Development Index of 0.647 lies between that of Bangladesh and Indonesia. India is home to a strong workforce which, in recent years, has attracted garment and apparel manufacturing business.
India’s manufacturing hubs include cities like Mumbai (population 20.4 million), Delhi (30.3 million), and Chennai (11 million); such populations, coupled with significant investments in infrastructure, have made India an appealing sourcing hub for some of the world’s largest brands. In fact, the Indian government made the telling move of allowing 100% foreign direct investment in the garment sector, a departure from its typically protectionist attitude toward domestic businesses. The investments are paying off; India’s textile and clothing exports reached $36.62 billion in fiscal year 2019, and ready-made garments comprised $16.27 billion of this. The manufacturing sector comprises 24.89% of the nation’s workforce, with fabric and apparel employing around 45 million people and apparel alone employing 12.9 million.
Coronavirus is dealing a blow to the apparel industry, even as actual COVID-19 cases remain relatively slow to take off — there are 17,655 confirmed cases and 559 deaths at the time of writing, with the first cases having arrived on January 31. According to the country’s Apparel Export Promotion Council, $2 billion in orders is currently frozen, and vast quantities of finished products are sitting unclaimed in foreign ports. A. Sakthivel, the council’s chairman, believes that the very fate of the apparel sector now lies in the hands of the government, which has yet to announce a special export-related package. Despite its rapid growth in apparel, India also faces a disadvantage in that they “make up only 4% of apparel sourcing as compared to 8 to 12% of Bangladesh”.
In the meantime, the livelihoods of 45 million people working in fabric and apparel hang in the balance. These workers are at extreme risk for contagion once the virus truly gains a foothold in India, which is currently on an extended lockdown. As the number of tests have increased, a clearer picture is forming: the virus is spreading. It is finding breeding grounds in densely populated areas, and new infection clusters are sprouting up every day. Lifting the lockdown before the proper time has passed could prove disastrous, but it may be unavoidable in the face of mass hunger. Some factories are already trying to open simply to help with social distancing measures for workers living in on-site housing.
“There are fears that a major coronavirus outbreak in the country – one of the world’s most densely populated – could result in a humanitarian catastrophe,” writes the BBC.
Any of us who have had the privilege of visiting our supply chains in India know the conditions in the country. India is still in the early stage of contagion, but with only 4.8 practicing physicians per 10,000 people. and the largest cohort of individuals with respiratory illnesses on earth, Foreign Affairs writes that this “densely population country [is] the perfect fodder for a virus that attacks the lungs of its victims”. A combination of poverty, a lack of safety standards, and a delayed infection curve put India at risk for tragedy on an unprecedented scale. Factories and other supply chain facilities remain the lifeline for millions of people; these people must not have to risk their lives and the lives of their families by returning to their jobs.
The industry must act now
India is uniquely vulnerable to widespread loss of life due to COVID-19. Brands and retailers may not have the luxury of time, but we all have the luxury of data — and the data tells us we must act quickly as an industry if we are to protect lives.
Brands, retailers, and businesses are struggling, and that struggle is valid. But the opportunity to protect lives must become a priority in this trying time. The Sourcing Journal writes, “It seems like yesterday the fashion industry was consumed with corporate social responsibility and sustainability…. What remains of these conversations now?” We have the chance now to help in the most impactful way possible. When this crisis passes, companies that implemented COVID-19 health and safety measures in their supply chains will also be better prepared for the new levels of concern over such precautions from consumers. This is our chance to take care of our partners and friends overseas. We cannot do it in isolation. We must act together as one.
Inspectorio offers Rise platform to help in the fight
The question now becomes, how can brands and retailers reactivate their supply chains without putting vulnerable factory workers at undue risk?
The answer is to quickly implement vital health and safety readiness programs at all factories, strictly monitor compliance with these guidelines, and provide corrective action plans and training to facilitate continuous improvement. The reality, however, is that most organizations do not have the necessary tools to implement these measures at speed or at scale.
This is where Inspectorio can help. Our Rise platform is uniquely positioned to help protect factory workers on a global scale:
- We have been collaborating with leading brands, retailers and international NGOs to assemble a library of COVID-19 workplace readiness guidelines.
- Our real-time monitoring and reporting provides brands and retailers with instant updates on how their overseas partner facilities are complying with important health and safety initiatives.
- It is now becoming critical to be able to view up-to-date COVID-19 data trends and compliance information side by side. Our Rise platform features a COVID-19 Sourcing Dashboard that puts real-time COVID-19 and compliance data in one place, letting brand and retailer teams make better-informed sourcing decisions.
- As facilities submit assessments within the Rise platform, it automatically generates the CAPA reports that include automated recommendations for corrective actions, as well as didactic e-learning courses to facilitate continuous improvement.
- Our comprehensive Analytics dashboard helps brands and retailers understand which facilities need improvement, as well as what type they need.
Brands and retailers have a duty to ensure the safety of their partner facilities. Inspectorio is doing our part — but we need other organizations to do their part too. Millions of lives can be protected if act now.
For more information on the Inspectorio COVID-19 Workplace Readiness guidelines and the Rise platform.
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