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Credit availed by Indian textile firms decline 20%

Jun 11, 2021
Credit availed by Indian textile firms decline 20%

The Indian textiles and apparels industry has availed credit of Rs 1.620 trillion as of December 2020, which witnessed a Y-o-Y decline of nearly 20%, as per the report by SIDBI-CRIF. This is due to the suspension of manufacturing activities in the immediate aftermath of the COVID-19 lockdown in March 2020. The report also states that the number of active loans (volume), in the sector stood at 4.26 lakh, as of December 2020. Small Industries Development Bank of India (SIDBI), the principal financial institution engaged in the promotion, financing and development of Micro, Small & Medium Enterprises (MSMEs), and CRIF High Mark, a leading Indian credit bureau, recently launched its third edition of Industry Spotlight that analyses the ‘Indian Textile and Apparels’ industry.

The industry observed a quarterly decline in Non-Performing Assets or NPAs (proportion of credit value delinquent by 90+ days) over the last 2 years, from 29.59% in September 2018 to 15.98% in September 2020. NPAs in December 2020 increased by 0.94% which is nearly 8% lower than NPAs in December 2019.

As per the third edition of the Industry Spotlight, export credits have reduced by 25% due to a decline in exports on account of the pandemic. Earlier apparel, home textiles, and fabrics have contributed to a majority share of exports. At the state level, the largest share of the credit portfolio is shared by Maharashtra. It accounts for 25% of the credit book to the sector. Also, the top 13 regions that are rich in apparel and textile manufacturing accounted for 80% of the credit portfolio of the sector, according to Navin Chandani, MD & CEO, CRIF India. He also said that the government has announced a special economic package under the Atmanirbhar Bharat program to benefit small entities like weavers and artisans. If the right policies are initiated and fair access to raw materials is offered, the sector can grow further.

According to Shri Sivasubramanian Raman, Chairman and Managing Director, SIDBI, the Textiles and Apparels industry is crucial to the country’s growth as it is one of the largest sectors of the Indian economy. It is the 5th largest in exports and it contributes nearly 12% of the country’s export earnings and 2% to GDP. He also mentioned that India is a world leader in textiles and to enhance India’s textiles competitiveness globally, the scheme for Mega Integrated Textile Regions and Apparel Parks was announced. Public sector banks are the lenders in offering finance and contributed to 62.61% in volumes as of December 2020. By value the share of the private banks is the largest and is roughly around 40.54%.

Source – Press release

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