Indian textiles and clothing industry has been reeling under financial crisis during the last four years due to de-growth in the exports, cheaper imports and glut in the domestic market. The industry has been pleading for two years moratorium period for payment of all term loans which was duly recommended by Union Textile Minister, Smriti Zubin Irani. The same demand was made when the textile industry delegation met the Prime Minister on December 26, 2019. Under these circumstances, the unforeseen COVID-19 pandemic has created severe financial stress especially after the announcement of 21 days lockdown. The textile industry, being highly capital, labour and power intensive, is facing acute crisis. The industry had represented to the Government to give one year moratorium for payment of loan and interest, provide 25 per cent additional working capital without additional collateral or margin money and defer payment of electricity charges for three months. Under these circumstances, the relief package announced by RBI has come as a sigh of relief for the ailing textile industry.
Ashwin Chandran, Chairman, The Southern India Mills’ Association (SIMA) has thanked the Prime Minister, Union Finance Minister and Union Textile Minister for making certain announcements on financial relief package through RBI. Ashwin has welcomed the announcement of three months moratorium period for payment of term loans and working capital interest, advising the banks to re-calculate the drawing power liberally and extending additional working capital facility, substantially reducing the Repo rate thereby enabling the financial institutions to reduce the rate of interest and making provisions to exclude the three months moratorium period for asset re-classification and credit rating. Ashwin has stated that these measures have come as a great relief for the textile industry in the short run.
SIMA chief has appealed to the Prime Minister to advise RBI and banks to give clear instructions to provide additional working capital to the tune of 25 per cent without any additional collateral or margin money. He has also strongly felt that extending three months moratorium for the interest payment towards term loan also is the need of the hour as the industry would not be in a position to make any payment since they have to make payments for salaries and wages and meet the huge standing charges. He has urged to the Prime Minister to advise RBI to issue clear direction immediately for extending the moratorium for the payment of interest on term loans as the March 2020 quarter is fast approaching.
Ashwin Chandran hoped that the Government would review the situation in the days to come and announce suitable financial measures. He has also appealed to the State Governments in South India to defer payment of current consumption charges for three months and waive the demand charges for electricity.