The Indian handicrafts industry has suffered a major setback with the closure of 1,100 stores of Pier-1, a 60-year-old US-based retail company, going into the bankruptcy process. The economic crisis has arisen in front of dozens of exporters across the country including Noida. Surprisingly, the company completed the paperwork for the insolvency process application in mid-February this year. But it kept Indian exporters in the dark for two months.
When the exporters came to know about the company’s insolvency process, they contacted the company officials, yet the company kept on avoiding the exporters for a month. In view of this, EPCH has clarified that now every activity of the companies concerned will have to be closely monitored to conduct global business. Also, it will be mandatory to insure orders from the ECGC to keep your goods safe.
It has come to light that the exporters have not insured the company’s order. To avoid potential losses, the Export Promotion Council for Handicrafts (EPCH) has approached the Export Credit Guarantee Corporation (ECGC) and urged them to immediately release the insured amount to the exporters. ECBC Delhi chief Saurabh Srivastava assured exporters that the sum assured would be paid in 30 days instead of 90 days. However, he has also said that exporters should complete their paperwork at the earliest.
EPCH Vice President Raj Kumar Malhotra (MD, Asian Craft, Gurugram) said that when negotiations were initiated with ECGC, it was found that earlier peer-1 had never stopped payment of exporters. The company has also paid compensation if the retail chain of handicrafts, home furnishing, and furniture sector were canceled occasionally. This is the reason why most of the exporters did not get their orders insured. But the manner in which the company closed 1100 stores in the US, Canada, and Mexico in the Corona period and contacted the US government and applied for the insolvency process, is not a good sign for handicraft exporters.
The company declared itself insolvent as well as closed all previous orders and payments. EPCH former vice-president Rajesh Kumar Jain (MD, Xmart International) said that so far orders worth Rs 125 crore have been found to be around 80 exporters. Pier-1 canceled it six months ago after placing an order for a large number of stores, but it was not expected that the company would close 1100 stores and declare itself bankrupt.
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