For more than nine months now, COVID-19 pandemic is an ongoing catastrophe that has an unprecedented impact on global healthcare systems. The virus has directly impacted the entire world, while Governments and international organizations are trying their best to fight against the spread of the virus and reduce fatality through various measures. The pandemic also led to a significant increase in demand for Personal Protective Equipment (PPE) globally for the prevention of virus spread among masses and for frontline health workers. World Health Organisation, Centers for Disease Control and Prevention (CDC – USA) and Ministry of Health & Family Welfare (GOI) laid down guidelines for rational use of PPEs for health care workers and others on the frontline.
Government of India played a prominent role in encouraging PPE manufacturing and mass domestic sourcing (through HLL) during the initial months of COVID-19 outbreak in India. Ministry of Textiles and Ministry of Health & Family Welfare collaboratively laid down a temporary framework for testing and certification of PPEs directly by designated laboratories.
Before March 2020, India was meeting the demand for medical coveralls, mostly from imports. However, some of the protective wear and medical equipment players were manufacturing and exporting products such as surgical masks, respirators, latex gloves, medical goggles, aprons, surgical gowns etc. The sudden surge in domestic demand caused the Government to prohibit PPE exports. Even then the capacities were found insufficient vis-à-vis demand.
Several PPEs such as coveralls, aprons & gowns are textile-based cut & sew products which became the focus for Indian apparel exporters particularly. The global demand for apparel was anyway nose-diving, causing the capacities to go unutilized. The Indian apparel manufacturers grabbed the opportunity and utilized their existing cut and sew infrastructure to produce PPEs. Other PPEs viz. masks, respirators, eye protectors and gloves require specialized machinery. But over the last four months, significant capacity addition happened for manufacturing masks and respirators. Today, in most of the PPE categories, India is well placed to cater to the domestic market as well as to explore international markets.
The quick transformation of apparel manufacturers to produce PPEs, new investments and Government decisions has led India to become the second-largest PPE manufacturing nation in the world. As per Government reports, there are 1,100 coveralls manufacturers with a capacity of 500,000 pieces per day which can further be increased. The increase possible is because the apparel manufacturers are prepared to divert power to coveralls manufacturing if they see certainty in demand from domestic or export markets.
For coveralls, aprons & gowns availability of hot seams sealing machine and SMMSS (composite) fabric were significant challenges initially, but industry overcame those very effectively soon. Of the other PPEs, unavailability of quality melt-blown in the domestic market (only for masks & respirators), lack of indigenous technology solutions and logistical challenges due to global lockdown to import machines posed a challenge for new investment during the initial period.
On the testing and certification side, India lacked the testing facilities for certification during the initial months. Currently, there are more than 10 BIS recognized labs that are testing coveralls, surgical masks, FFP2 respirators and eye protectors. Awareness of SMEs towards domestic and global certifications is another pressing challenge to be compliant and sustainable.
Indian manufacturing systems and processes are not benchmarked with global standards. Such benchmarking is necessary to ensure the quality of production and price competitiveness. Unless manufacturers follow the benchmarking system and processes, they can’t stand in global markets against players say from China having huge economies of scale and are fully integrated manufacturing.
New Certification Regime by BIS
In June, when pressing domestic demand was satiated, the Government decided to switch over from an interim certification framework to the institutionalized regime through the Bureau of Indian Standards (BIS).
Apart from coveralls, there is significant capacity addition happened for surgical masks and FFP 2 (or N95) respirators. As on 26th October, BIS has certified 162manufacturers for FFP2 with an estimated capacity of 6 million pieces per day and25 surgical masks manufacturers with an estimated capacity of 3.5 million pieces per day. Besides, BIS has certified 45 coveralls and six Eye Protection manufacturers. Almost similar number of application for all four products categories are in the pipeline with BIS for certification.
From March 2020, India banned the export of any PPE item so that domestic demand can be met. In June exports were opened partially for coveralls. As per Director General of Foreign Trade (DGFT) circulars; coveralls, gowns, aprons, surgical masks, FFP2 (N95) mask and face shields have been made freely exportable from India. Medical goggles are allowed to export with a cap of 2 million pieces per month, while nitrile gloves are still restricted for exports.
*Licence or permission from the government for exports is required
Buyers found an added advantage in their move to Vietnam in the form of lower wages. When it comes to the garment industry, which is a highly labour-intensive ecosystem, Vietnam has low and competitive wages. Even though the wages in Vietnam are slightly higher than that of low-cost nations like India and Bangladesh, they are much less in comparison to that of China. Wages in China have been increasing over the past 10 years due to the increasing cost of living and extensive up-skilling that has taken place in the country.
Future of PPE Manufacturing
Allowing exports has opened up new avenues for PPE manufacturers, but international certification (e.g. CE and FDA) remains the major challenge to explore global markets. Several traditional manufacturers had obtained certifications in the past and are now fully ready to export. But most of the apparel manufacturers are facing a dilemma as apparel demand is steadily increasing while the PPE demand will eventually stabilize. After catering the spiked domestic market demand, some of these manufacturers have entirely stopped PPE manufacturing owing to the uncertainty of demand. In contrast, few have established separate SBU for PPEs and are serious about tapping into this opportunity for a longer run.
Some of the largest countries like India, Brazil and USA are yet to see the downfall in the number of COVID-19 cases, which indicates that it will take much more time and efforts by governments and healthcare systems to eradicate the virus. This also indicates that demand for PPEs will continue to sustain at the current level at least for the next few months. Several governments and developmental agencies are also looking to stockpile the PPEs to tackle any such pandemic like event in future which ensures the sizable PPE demand for medium to long term. Moreover, buyers in major global markets of EU and USA are looking for diversifying as part of China Plus One strategy and India is poised as one of the best alternatives.
To summarize, now it is up to Indian manufacturers how they are coping with not only obtaining certifications and become export compliant but also benchmarking their manufacturing systems and processes to supply quality products continuously at a competitive price.