Textile exporters seek govt help to fight crisis

“The European buyers, particularly from Italy and Spain, have asked us not to export garments and wait for a minimum of one or two months till the situation resumes normalcy. Some of the buyers are even cancelling the orders. More importantly, the buyers are defering the payment against the promise for already sent goods,” said R M Shanmugham, president of TEA, in a letter to Union Finance Minister Nirmala Sitharaman.

The cause of concern is that production activities were going on to fulfil the commitment to deliver on time and such disruption has been causing huge financial impact on the units. “In the current scenario, the MSMEs are not in a position to repay the loans to banks. We apprehend that due to non-clearance of dues, the banks may classify the units as NPAs as per BASEL norms,” Shanmugham said in a release. To overcome the disruption in the economic activity caused by COVID-19, many developed countries like the USA, Germany, Italy, France, the UK, Japan and China have taken a slew of financial measures like reduction of interest rates and cash reserve, debt moratorium provided to MSMEs, deferment of loan and tax payment without interest, including announcement of bridge loans and credit guarantees also, he said, adding, “These countries have pumped in billions of dollars to bring the industrial sector back to normalcy. In fact, the US Federal Reserve has cut its key interest rate to virtually zero.”

In line with the financial measures taken by all the industrialised countries to bail out the units out of the ongoing crisis, the Finance Minister should take some proactive step and advise the banks not to categorise the units as NPAs for non repayment of loan and provide at least one year moratorium, which will help MSMEs sustain in the business.

The stimulus financial package measures are required to energise the market economy,Shanmugham said.