Govt support crucial for Indian textile-apparel industry

27 Apr '20

3 min read

Pic: Shutterstock

Support from the government would be crucial to revive the Indian textile and apparel industry during the current COVID-19 crisis and the post-lockdown phase, according to stakeholders. The industry, which mainly consists of micro, small and medium enterprises (MSMEs) faces working capital and other constraints due to unexpected order cancellations.

In response to Fibre2Fashion's email for recommendations to government for steps to be taken to support the textile-garment industry, Vardhman Textiles general manager Mukesh Bansal said, "The industry is under tremendous pressure owing to two major issues—constraint of working capital, and burden of fixed cost during the lockdown period."

The constraint of working capital is because payments are not being released by the brands, which are also facing working capital crunch. "To combat this, government can finance the industry for next 12-18 months via lower rate of interest and extra funds," suggested Bansal.

Speaking about the burden of fixed cost, Bansal said, "the major fixed cost for industry during the lockdown is wages of labour. Government can support the industry in this by enabling the employers to pay wages to the labour via financial assistance."

Government can provide financial assistance by bringing down borrowing cost from bank "down to 6 per cent from current level of 12 per cent," said Trigger Apparels Limited director-Marketing Rajagopalan.

Besides adhoc limits, the government and the RBI should instruct the banks "to liberalise repayment of loans, interest rates and debts, etc," said Rajiv Dewan, president, Garment Exporters Association of Rajasthan (GEAR).

According to Rajagopalan, the government can support the industry by making single GST slab of 5 per cent for all categories of products, removing income tax for the next 3 years, making all cash transactions legal with a 5 per cent cash tax on all such transactions, providing salary subsidy for lockdown period, making health and education free for all, and allowing industry to work in 3 shifts to boost employment.

GEAR's Dewan has already written to Prime Minister Narendra Modi sharing four basic mantras to revive the industry without providing any subsidy or compensation. First, through its good offices the government should initiate discussion with the domestic branded retailers, chain stores & buyers to support the garment industry.

Second, the government should immediately settle all claims pending and dues outstanding against government liabilities for GST / IGST / ROSL / MEIS / DBK and other schemes. And till the time all outstanding amount is released, adhoc limits to 90 per cent of value due against government receivables should be immediately made available with banks against simple application and statements of government dues.

Third, the government should instruct banks / RBI to extend complete liberalisation to the garment industry, as timely bank support will enable the industry to sustain during present and future COVID-19 impact.

Lastly, Dewan has suggested that the government give complete rebate on income tax for a period of three years, collect only 20 per cent in the fourth year, and gradually increase the collection percentage till the eighth year when it can collect 100 per cent income tax.

Fibre2Fashion News Desk (RKS)

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