Economy

Coronavirus pushes textile industry into a corner

LN Revathy Coimbatore | Updated on March 18, 2020 Published on March 18, 2020

A representative image.   -  REUTERS

Industry seeks moratorium of loan repayments and other sops

 

The slew of measures being taken by the government to fight the coronavirus pandemic has put textile manufacturers in a spot. While on the one hand the sector is struggling to continue with its production schedule as offtake has almost come to a halt, on the other the pressure to repay its dues to banks is forcing the industry to appeal to the government for a one-year moratorium on repayment of principal and interest on loan.

“It is affecting every sphere of life globally, be it manufacturing or business,” said Ashwin Chandran, Chairman, The Southern India Mills’ Association (SIMA).

Stating that the situation is taking a turn for the worse due to closure of malls and retail showrooms, he said, “The textile and clothing sector is labour and capital intensive. A majority of workers are migrant labourers; they have now started to return to their native places. With total disruption in workflow and production schedule, the industry is facing its worst-ever crisis. Our immediate appeal is for a year’s moratorium for repayment of principal and interest. It would go a long way in tiding over this crisis.”

Meanwhile, the knitwear garment exporting community in Tirupur, which had only last week said that the impact of COVID-19 was not yet felt, has now gone on record about its dire plight. “European buyers, particularly from Italy and Spain, have asked us to defer shipments till the situation gets back to normal. Some have cancelled their commitments, deferring payments on goods sent or not lifting the goods. This is a cause for concern as production has been taking place continuously to fulfil the committed orders and for delivering on time. Production plans have gone topsy-turvy and since a majority of the units are small enterprises, we fear that due to non-clearance of dues, the banks may classifying the units as NPAs. In addition to this, prices of dyes and chemicals have gone up by about 30 per cent, impacting production,” said Tirupur Exporters’ Association President Raja Shanmugham.

Shanmugham did not fail to point out that to overcome the disruption in economic activity caused by coronavirus (COVID-19), many developed countries like the US, Germany, Italy, France, UK, Japan, and China have already taken a slew of financial measures like reduction of bank interest rates and cash reserve, debt moratorium to MSMEs, deferment of loan and tax payment without interest including announcement of new bridge loans and credit guarantees. These countries have pumped in billions of dollars to bring the industries back to normalcy.

In line with the financial measures taken by all the industrialised countries to bail out the units from the ongoing crisis, the industry in India too is seeking a bailout package, a financial stimulus package to re-energise the market economy and quantitative easing to revive and uplift the confidence of entrepreneurs.

Published on March 18, 2020
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