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Tirupur Exporters’ Association (TEA) urged Finance Minister Nirmala Sitharaman to announce financial measures to rejuvenate the economy and business confidence of the exporting units in order to offset the impact of coronavirus on Monday.
In a letter to the Finance Minister, TEA president Raja M Shanmugham sought a proactive step and immediately advise the banks not to categorise the units as NPAs for non-repayment of loan, but provide at least a one-year moratorium which, according to him, would help the units, particularly the MSMEs, to sustain in the business.
The stimulus financial package is also required to re-energise the market economy and a quantitative easing methodology is required at this hour of crisis to revive the economy and uplift the business confidence, he said.
He said the European buyers, particularly from Italy and Spain, have already asked TEA members not to export the garments to them and wait for a minimum one or two months till the situation was normal and the shops are re-opened.
The TEA president further said some of the buyers were even cancelling the orders also and more importantly, the buyers were deferring the payment of the already sent goods. He said the cause of concern is that the production activities have been continuously taking place to fulfil the committed orders and deliver in time and the disruption at this crucial juncture is causing a huge impact on the financial part of the units.
Disruption in economy
The protection planning of the units have gone topsy-turvy, and in the current scenario, the units, particularly MSMEs, would not be in a position to repay the loan to the banks, he said. “We apprehend that due to non-clearance of dues, the banks may straight way classify the units as NPAs as per BASEL norms. In addition to this, the dyes and chemicals prices have gone up by about 30 per cent which will impact cost of production also,” the letter said.
To overcome the disruption in the economic activity caused by coronavirus, many countries like USA and China have already taken a slew of financial measures like reduction of bank interest rates and cash reserve, debt moratorium provided to MSMEs, deferment of loan and tax payment without interest,including the announcement of new bridge loans and credit guarantees also, the TEA president added.
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