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Chennai, Sept 24
The Tiruppur Exporters’ Association (TEA) has written to the Finance Minister and RBI Governor requesting support to bail out the Tiruppur knitwear garment exporting units from the ongoing crisis caused by the impact of the Russia-Ukraine war.
In its appeal, the association has sought a specified scheme for garment sector MSMEs. Under the ECLGS, 20 per cent of the existing credit should be used to bail out the knitwear garment sector, as given to the hotel and travel sector.
“We wish to point out that the Knitwear Exporting Units in Tiruppur Cluster, comprising 95 per cent MSMEs, face a threat to their existence due to financial issues such as fewer booking orders, delay in receiving payment, non-acceptance of booked orders and deferment of shipment. The impact of issues are piling up every day,” said Raja M Shanmugham, President, TEA, said in a communication to Finance Minister Nirmala Sitharaman and RBI Governor Shaktikanta Das
He said at a time when the garment sector was attempting to come out of the twin impact of the pandemic and cotton yarn price hikes, the latest crisis as a result of the Russia-Ukraine war has worsened the situation for exporters in the region.
In the European Union, the priority of households has shifted to gas, power, and food articles, rather than the purchase of garments. Also, garments are used for longer. The revival of the crippled economy is likely to take a few more months. In the US market, too, a similar situation prevails and the threat of recession looms large in the US and UK markets.
The Tiruppur Knitwear Cluster exports 75 per cent of its garments to the US, EU, and the UK markets. The impact of the slowdown in consumption in its key markets is now quite visible in the export performance of Tiruppur, he added.
The units are running out of solutions to sustain their businesses after meeting statutory financial requirements.
The Association has requested the Centre and RBI to provide handholding policy support. The Association has sought a relaxation in NPA norms beyond overdue timeline of 90 days. It has also requested RBI to extend the time period of export realisation proceeds.
Shanmugham said the Association has also communicated to the banks the current crisis faced by the units.
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