Finally, after five press conferences by the Union Finance Minister Nirmala Sitharaman and the Minister of State for Finance Anurag Thakur, on Sunday (18 May), things were clear about the historic package of Rs. 20 lakh crore. The package has something for everyone belonging to various sectors like infrastructure, defence, mining, education, DISCOMs (electricity distribution companies), agriculture, and health amongst many others. Apart from the monetary relief, changes at policy level were also the attraction of these announcements.
However, there was nothing specific for textile and apparel sector, and major associations of the industry – who had many brainstorming sessions with the Government regarding the package – shared in their press release on the very first day of the FM’s press conference, “We felt that the Government would soon announce a special package for boosting exports for all the textiles & clothing products including cotton yarn and fabric to grab the emerging opportunities and also consuming the surplus cotton that might significantly affect the cotton farmers in the country.”
Raja M. Shanmugam, President, TEA shares with Apparel Resources, “The real issues still pertaining to the industries, and particularly to our textile industry, are looming large threatening its existence. Because of the sudden closure of operations across the globe, the circular economic chain got crippled. In this situation, liquidity got thoroughly damaged for which our Government has declared a supportive gesture for MSMEs by granting 20 per cent additional working capital, but the RBI declared the moratorium of 3-month period is going to get over by 31 May, and then by 1 June, the industries would need to pay the compounded interest. Here the point is whatever liquidity support given for the MSMEs is again going to be drained systematically by the banks as the collection of pending dues without helping it out to use it for the business revival aspects.”
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He further adds, “Moreover, the closedown period has been extended till 31 May. Imagine industries have not been allowed to run for the last 2 months fully (3 months if we take the global market closure date)! Hence, our request is the moratorium period be extended for at least the next 9 months to ensure the intended revival of industries, particularly MSMEs.”
“Even for the large industries, the economic package support is much required to get back to the previous normal. But this was missing in the announced economic package. Moreover, the moratorium for them must be extended for at least next 3 months. The banks need to be advised or allowed to restructure the stressed accounts, if needed, without downgrading that account as NPA. I hope our Government would pay attention to these realities and take up a positive step to ensure the real intended revival to happen after this COVID-19 debacle,” Raja M. further asserts.
Rajeev Bansal, MD, Celestial Knits & Fabs, Noida and Secretary, Indian Industries Association (IIA), has an interesting point to make, “This is not a relief or support package; it is just a liquidity package as MSME can get the loan, but have to return it with interest, as usual. And getting a loan in the current condition is a very difficult as well as time-taking task.” Celestial Knits & Fabs is one of the well-known apparel export companies of Noida.
Many other apparel manufacturers too raised the issue of loan process, including Vivek Saxena, Director, Moissanite Apparels, Noida, who says, “The process regarding loan is very cumbersome. Though the Government has said that the loans will be given without collateral, there are too many ifs and buts in every announcement. Even for PF relaxation, there are so many terms and conditions that anyone can barely get any advantage,”
Running a medium-size apparel factory and working with good buyers of domestic and the Middle East markets, Murtaza Lokhandwala, Director, Bubble Bee Export House, Ahmedabad, believes, “The need of the hour is to provide direct cash benefits for at least 3 months to the bottom 60 per cent of the society in order to spin the wheel of the economy. Giving loans to the industry will not create demand in the market. Even if a factory owner gets a loan, he may not pay previous wages and salaries, and even going forward, he will be able to do so only after a month of receiving an order, in case he manages to receive one that is. In the domestic market, there will be orders only if customers will have money in their pockets to purchase things. What will one do of the loan when there is no business?”
Many apparel manufacturers shared that they were expecting direct help, as that, and not loans, is the need of the hour. “Relief packages by the Government may be music to ears, but the fact is it is thin dust. Top-level export houses may benefit, but the bottom of the pyramid industry (MSME) will not get any immediate support. We need straight help, as in 2+2 = 4,” says a medium level apparel manufacturer on the request of anonymity.
Several other apparel manufacturers across India also maintained the same spirit regarding this issue. Apparel Resources has also approached major associations like AEPC, CITI, SIMA to share their opinion on this issue. As responses from these are awaited, we request you to stay tuned to the website to know the same.
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