Gave a representation to FM Nirmala Sitharaman in Chennai.

The Tiruppur Exporters’ Association, whose members are into knitwear manufacturing, has requested the Union Finance Minister Nirmala Sitharaman to immediately provide fresh infusion of liquidity to the struggling medium, and small and medium enterprises (MSMEs). This will help the units in the ‘Dollar Town’ — as Tiruppur in western Tamil Nadu is known for — get back to normal functioning, says a representation made by the association’s president Raja M Shanmugham to the minister in Chennai on Sunday.

Tirupur knitwear exports clocked ₹26,030 crores from April-January in the current fiscal and is expected to cross ₹32,000 crore by the end of the fiscal year. The association represents around 1,150 exporting units employing over six lakhs workers with 65 per cent of them women. Out of six lakh workers, two lakh are from other states like Orissa, Bihar, Jharkhand and Bengal, and from the North East.

Due to factors like impact of Covid pandemic and increasing prices of cotton yarn, MSMEs are struggling to repay the loan. The non-performing asset norms have to be relaxed to six months from three months to help the units sustain and rebuild their business, the association said.

“We request the Finance Minister to announce a new scheme like Emergency Credit Line Guarantee Scheme (ECLGS) and MSMEs be permitted to avail additional credit facility of 10 per cent to 20 per cent of the existing limit. This is the need of the hour to bail them out of the crisis. The MSMEs in progressive and performing industries, employment-oriented like the garment sector, would be considered under this scheme,” the association said.

In the last 15 months, there has been an unprecedented increase in the cost of raw material. This coupled with hike in accessory prices and job working charges have impacted the MSMEs mainly in the liquidity front. The units have been operating from ‘Hand to Mouth.’ The continuous steep hike of the inputs has drained out their liquidity, even after getting credit support through ECLGS.

For example, the exporting units which were purchasing cotton yarn at ₹300 per kg 15 months back can now purchase only half a kg of cotton yarn for the same amount. As a result, the MSMEs are now undergoing a severe liquidity crisis.

The cause of concern is that as per the commitment made to the foreign buyers well in advance, the MSMEs must compulsory execute the orders, despite incurring losses or getting a wafer thin margin. Nearly 95 per cent of the units in the garment exports sector are MSMEs, the association said.

In the Union Budget, a condition has been imposed which requires the knitwear exporting units to visit a Customs Preventive Unit located in Coimbatore for import of items on each occasion. This causes practical difficulties and is also time consuming apart from undue delay and additional expenses. This problem has emerged at a time when the government is advocating for ease of doing business.

The association urged the minister to remove the condition and restore the old system of submitting the running bond to the Customs and they deduct the duty foregone amount from the Bond, which will be also system oriented and there would not be any hassle to the exporting units.

Published On : 01-03-2022

Source : The Hindu Businessline

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