MSMED Act of 2006 is a game-changer for MSMEs
The Yarn Bazaar discovers real-time yarn prices, information, and market trends in an instant. Their proprietary processes and flexible unsecured financing options allow yarn sellers to increase their reach and sales with higher margins, and buyers to reduce their raw material & procurement costs saving time and effort. In the midst of the Indian spinning industry’s slow pace, Pratik Gadia, Founder, The Yarn Bazaar, discusses the underlying reasons and proposes solutions in a conversation with Divya Shetty.
The export performance of the Indian spinning sector is currently experiencing a sluggish pace. What, in your opinion, could be the underlying reasons for this?
The slowdown in the U.S. and EU and lack of cost competitiveness are among the factors affecting textile and clothing exports from India. Additionally, trade barriers, regulatory compliance, fluctuating exchange rates, intense competition, and rising production costs are among the challenges faced by the Indian textile industry.
Also, the 9-11% duty in UK is acting as a barrier. If it gets reduced, we can see a steep jump in the orders.
Global economic slowdown because of wars have added to the supply chain disruptions and the risk of stagflation, has led to a sharp slowdown in global growth. Inflation, and weak consumer spending also adds to the challenges. Also, adapting to fast-changing fashion trends is essential for competitiveness and is putting pressure on the traditional setups.
What challenges does the spinning industry face on the domestic front?
The spinning industry grapples with multifaceted challenges on the domestic front, exacerbated by the global economic slowdown. Indian exporters, compelled by these conditions, are flooding the domestic market with products at reduced prices, intensifying competition and creating difficulties for MSMEs. A prevailing issue is the limited operational scope of these MSMEs, confined to specific areas without access to broader markets for effective marketing and sales.
Furthermore, cash flow problems loom large, disrupting the industry’s financial stability. Fluctuating raw material prices add an additional layer of complexity, making it arduous to anticipate and manage production costs effectively.
These challenges collectively create a demanding environment for the spinning industry, affecting its financial health, production efficiency, and overall competitiveness in the domestic market.
What kind of assistance from the government do you expect that could improve the current situation?
I believe the Indian government’s proactive measures, such as the MITRA scheme, showcase a commitment to the spinning industry’s growth. The recent Comprehensive Scheme Guidelines for the Knitting & Knitwear Sector and the National Technical Textiles Mission (NTTM) further highlight dedication to innovation. The allowance of 100% FDI in textiles and the strategic move of the Production-linked Incentive (PLI) Scheme for manmade fibre and technical textiles over the next five years are promising steps. I’m optimistic about their potential to benefit a significant part of the spinning industry. If the government could fast forward the implementation of these initiatives, it would undoubtedly accelerate the positive impact on the industry. Quick spread of these initiatives would benefit not just the spinning industry but the entire ecosystem, promoting widespread growth.
In my view, the MSMED Act of 2006 is a game-changer for MSMEs. It puts a compounded fine on buyers who delay payments beyond 45 days from the acceptance of goods or services. This, I believe, ensures timely payments and brings a sense of financial stability to our small and medium enterprises, fostering fair business practices.
What opportunities exist in the spinning sector, and which segment (e.g., home textiles, technical textiles, etc.) has the potential to be a significant game-changer?
In the current scene of the spinning sector, there is a huge potential for home textiles. We are hoping that global markets will recover soon, this will significantly boost exports, and will leverage the versatility and cost-effectiveness of India’s production of man-made fibres to cater to diverse industry needs.
Also, as more companies venture into technical textiles, the demand for skilled employees will rise, creating opportunities and contributing to overall economic growth. So, both home textiles and technical textiles seem to be holding some real promise for our spinning sector.
And with consumers getting more conscious about their choices, sustainable yarns are getting quite the spotlight. It’s interesting how the shift towards sustainability aligns with what consumers want and adds another layer of opportunity for our spinning sector.