25% decline in credit availed by textiles industry
A sector study brought out by SIDBI and credit bureau CRIF Highmark states the pandemic has indeed impacted the textiles and apparels industry:
The Indian Textiles and Apparels Industry has availed a total credit of `1620 billion as of December 2020, which is a yoy decline of nearly 20%, says the third edition of Industry Spotlight that analyzes this industry brought out by SIDBI and credit bureau CRIF Highmark. The decline is due to the suspension of manufacturing activities in the immediate aftermath of the lockdown in the wake of the pandemic in March 2020.
The report mentions that the number of active loans (volume) in the sector stood at 426,000 as of December 2020. Also, the industry observed a quarterly decline in NPAs (proportion of credit value delinquent by 90+ days) over the last 2 years, from 29.59% in September 2018 to 15.98% in September 2020. NPAs in December 2020 increased by 0.94% which is nearly 8% lower than NPAs in December 2019.
Observing that over the years, apparels have contributed to a majority share of exports, followed by home textiles and fabric, the report states that export credit as of December 2020 stands 25% lower yoy, largely attributable to a decline in exports due to the pandemic. With 95% of the overall credit by volume of the sector concentrated in MSME borrowers, the industry has a presence of close to 500,000 borrowers as of December 2020.
The report states that at the state level, Maharashtra has the largest share of the credit portfolio at 25% of the credit book to the sector. The 13 regions rich in textiles and apparels manufacturing accounted for 80% of the credit portfolio of the sector as of December 2020. Nearly all states have districts manufacturing textiles and apparels, having several credit active units. Some districts such as Mumbai and Surat have more than `100 billion credit portfolios as of December 2020.
The report also mentions that the sector contributes 7% of the country’s manufacturing production, 2% of the country’s GDP, 1.2% of the country’s export earnings and there are over 45 million workers in the sector with another 6 million in the allied industries. Public sector banks are the dominant lenders for the sector with a share of 62.61% in volume as of December 2020. The share of private banks, NBFCs and foreign banks were 23.49%, 8.66% and 1.41%, respectively. By value, private banks have the largest share at 40.54% followed by public sector banks with 36.59%, foreign banks comprising of 9.14% and NBFCs with 8.47% as of December 2020.