Now that the textile and apparel manufacturers are not happy with the Rs. 20 lakh crore package recently introduced by the Government, they have reiterated various demands to the Government.
Tirupur Exporters Association (TEA), the leading trade body of Tirupur’s apparel manufacturers, has approached Prime Minister’s Office with its demands.
Most importantly, the industry has urged to extend the moratorium on servicing of interest and principal by another 9 months to MSMEs.
Regarding term loan moratorium, the industry concern is that the moratorium of 3-month period will get expired by 31 May 2020 and the commencement of repayment starts by 1 June 2020, including the compounded interest calculated for the moratorium period.
Though the Government has now declared a supportive financial measure for MSMEs by granting 20 per cent additional working capital to ease the liquidity, challenges are still there for MSMEs. As the lockdown period has been now extended till 31 May 2020 and the industries have not been permitted to operate and moreover, if one takes into account the global market closure date also, it (non-operational period of the industry) would be actually 3 months..
“Without having any activities and the house totally in disorder, the MSMEs could not repay the interest and principal. With this background, we strongly feel that the revival of MSMEs would happen only after another 6 months, by addressing the issues one by one,” says Raja M. Shanmugham, President, TEA.
As far as non-MSMEs (not big corporates) are concerned, their condition is also not different as they too are facing the liquidity crisis. In such a case, the moratorium on servicing of interest and principal is extended by at least 3 to 6 months.
Apart from these, industry is also asking for restructuring of debt. In order to enable those units to come out of crisis, a one-time ‘Restructuring of debt’ option should be made available to all those who are in need. This restructuring should not result in asset downgrade resulting in units classified as NPA – rather this should be announced as a ‘Hand holding’ opportunity to the otherwise performing units but that are stressed due to this COVID-19 situation.