Garment manufacturers in Indore are seeing a 40 per cent drop in orders due to a new rule requiring payments to suppliers within 45 days. 

The garment industry typically operates on a much longer payment cycle. However, as a result of the new rule, manufacturers are being forced to cut back on production just ahead of the peak demand season, which starts around Eid. 

Ashish Nigam, President, Readymade Textile Dealers Association says, the new rule makes clearing dues within 3 months a difficult task. The payment terms are forcing retailers to cut down on orders. 

Readymade garments manufactured in Indore are supplied across the country with Tamil Nadu, Kerala and Andhra Pradesh as major markets sharing over 60 per cent of market share.

Due to the new rule, orders from Madhya Pradesh, Gujarat, Maharashtra and Southern India have declined. This is forcing most garment units to reduce manufacturing during the peak demand season amid confusion and doubts over the 45 day payment limit.

A hub for ready-made garment manufacturers, Indore has over 1,500 small and medium sized garment producers and festivals are the peak business season for the sector.