To address the pressing concerns stemming from Amendment 43(B)(h) affecting payments to MSME units, notably within the garments industry, the industry is on its toes and taking several steps to safe guard their interests.
As per the new norm, a buyer is supposed to make payment for the purchase from MSME unit within 45 days. If they fail, the amount will be considered as profit for the buyer.
The amendments came in force from the current financial year.
The industry is strongly of the opinion that the step will have the detrimental impact of halted supplies and cancelled orders on MSME manufacturers.
The prolonged issue of delayed payments within the MSME sector has impeded its growth. The unique complexities of the garment sector have led to concerns. Emerging issues such as order cancellations from retailers are causing apprehensions within the industry.
Also Read: Textile production getting affected by Income Tax Act’s revised payment time limit
The industry across India is actively working to get changes in this norm as Surat-based textile traders met Union Finance Minister Nirmala Sitharaman and raised concerns.
They urged to postpone the implementation of the rules for a year and insisted that all traders should be included under MSMEs while enforcing this rule.
Another demand of the textile traders was to extend the time limit of payment from 45 days.
On the other hand, Clothing Manufacturers Association of India (CMAI) President Rajesh Masand, along with Ankur Gadia, Treasurer also had a meeting with Minister for Micro, Small and Medium Enterprises, Narayan Rane and sought his assistance in resolving this critical situation.
The minister acknowledged the proposals presented by CMAI and committed to personally addressing the matter with the finance minister, with the aim of alleviating the ongoing crisis within the garment sector.
CMAI requested to withhold the immediate implementation of the amendment. the introduction of a mandatory reduction in credit period over 3 years: A maximum period of 90 days by 31st March 2025; a maximum period of 60 days by 31st March 2026; and a maximum period of 45 days by 31st March 2027.
CMAI believes that with positive intentions, genuine and reliable buyers, may gradually adapt their business models to the shortened credit period, fostering a more transparent and compliant business environment under Section 43(B) (h).
Also Read: South India Garment Association concerned amid MSME rule changes
