Two-year moratorium for textile debt on cards

The government is considering a two-year moratorium for debt repayment to help financially stressed textile units.

This is to ease the liquidity crisis being faced by them because of a delay in refund of the Goods and Services Tax (GST) and other levies.

People in the know said the Union Ministry of Textiles, under the leadership of Smriti Irani, has made a recommendation to the Ministry of Finance. It is in an advanced stage of approval.

“Currently, the textile industry is facing huge liquidity problems because of a delay in refund of the Merchandised Export from India Scheme and the GST. This is hurting business sentiment. The industry needs an immediate ease in the liquidity crisis for improvement. Two years of moratorium on debt repayment to banks would help improve liquidity,” said Rahul Mehta, president, Clothing Manufacturers Association of India.

Meanwhile, to raise the industry’s voice more effectively, the industry has formed the National Committee on Textiles & Clothing (NCTC), a steering committee, by housing all industry associations in the textile value chain.

The committee comprises all stakeholders of the textile and clothing industry, such as the national textile associations Texprocil, Apparel Export Promotion Council, Synthetics

and Rayon Textile Export Promotion Council, Confederation of Indian Textile Industry, CMAI, as well as regional level textile and clothing industry associations under the chairmanship of T Rajkumar, CITI.

NCTC, in its first recommendation to the government, urged the government to place recycled polyester staple fibre under the 5 per cent GST rate. It also suggested that the Cotton Corporation of India, while procuring at a time when the prices fall below the minimum support price, should factor in international and domestic prices to protect the interests of farmers and the cotton textile

industry.

NCTC submitted a joint memorandum apprising the textile minister about the urgent need to release the pending claims under Rebate on State Levies/ Rebate of State and Central Taxes and Levies schemes for exports of garments and made ups, urging the banks to upload documents expeditiously for the release of Technology Upgradation Fund Scheme subsidy etc.

NCTC, in its memorandum, has urged the government to reduce margin money for working capital from 25 per cent to 10 per cent and the debt-equity ratio norm from 1:1.33 for the textile and clothing industry.