The industry is happy with the package announced yesterday and all trade associations have welcomed this initiative and thanked the Prime Minister and Finance Minister. However, despite a good package there are still a few things required for the industry.
One of the major requirements is that the benefit under Pradhan Mantri Garib Kalyan Package (PMGKP) of payment of 12 per cent of employer and 12 per cent employee contributions towards EPF accounts, which is extended by another 3 months till August 2020, should cover all the garment exporting companies as they are highly labour intensive with a lot of women workers.
There is a strong need to modify the MSME definition in terms of either investment or annual turnover to encourage technology upgradation in the MSMEs sector and also help the capital-intensive sectors like spinning, independent weaving, processing, etc.
“The new definition of MSME’s on the basis of the revised MSME classification is a very welcome step. However, it is strongly urged that the definition for apparel exporting units may kindly be changed to allow all such units having a turnover of Rs. 250 crore be defined as an MSME unit irrespective of their investment in plant and machinery as this is a long-standing demand of our industry, and would definitely assist in scaling up this sector. This is very much required. In light of the weakening of the Rupee, most of the small exporters have also already crossed this figure,” says Dr. A. Sakthivel, Chairman, AEPC.
Industry does feel that the Government would consider its urgent demand of extending the moratorium for repayment of loans and interest – already extended for 3 months from 1 March 2020 – for another 10 months, i.e., up to 31 March 2021.
Rajkumar, Chairman, Confederation of Indian Textile industry, has also appealed to the Government that though the above change in the definition of MSME would help certain sections of the industry, the modified MSME criteria of increasing investment or annual turnover would not much encourage technology upgradation in the MSMEs sector nor help the capital intensive sectors like spinning, independent weaving, processing, etc. They need greater support of the Government at this critical juncture.
Ashwin Chandran, Chairman, The Southern India Mills’ Association (SIMA) hoped that the Government would also consider and extend 25 per cent additional working capital without any collateral or margin money for all the categories of accounts other than MSMEs also in the next financial relief package to be announced shortly.