SME Times News Bureau | 17 Mar, 2020
The Apparel Export Promotion Council (AEPC) on Tuesday wrote to Finance
Minister Nirmala Sitharaman requesting her immediate intervention to maintain
the viability of the country's apparel exporters due to the uncertainty in the
global markets.
In the letter, AEPC Chairman A. Sakthivel said: "Recognizing the
volatilities in the global apparel markets and order
postponements/cancellations, our apparel sector needs full support of the
financial institutions in managing financial viability of the
organisations."
Apprising about the situation due to coronavirus pandemic, he said that many
members of the council were facing serious concerns in terms of working
capital, inventory pile up, postponement of orders, credit rating and export
realisations.
"We believe the current situation in the sector is extremely grave which
warrants urgent remedies and support from your end," Sakthivel wrote,
adding that in absence of such relief measures, bad loans may increase,
impacting the sectors overall credit ratings.
The AEPC chief further said that the apparel trade which is deeply integrated
with the global value chain has been impacted by the disruption in both imports
and exports. Uncertainties are developing over timely deliveries of imports of
raw materials, and on the demand side, communications are being received from
buyers on postponement of shipments, he noted.
Anticipating an adverse impact on the MSME sector, the industry body listed
suggested faster clearance of banking and packing credit, extension of packing
credit period from 270 days to 360 days, extension of bill realisation period
by the Reserve Bank of India from nine months to one year, and delay in
declaring companies accounts as non-performing assets (NPAs).
Other requests include, exemption of exporters from caution listing for at
least a year, enhancing existing limits for advances of exporters by 25 per
cent, asking commercial banks to enhance collateral-free lending up to Rs 2
crore and capping of collateral requirement at 35-40 per cent for lending
beyond Rs 2 crore, and extending the enhanced 5 per cent interest equalisation
scheme for MSMEs to all apparel exporters.
"The Interest Equalisation Scheme may kindly be extended for a period of 2
years up to 31 March 2022," the letter said.
The AEPC wrote a similar letters to RBI Governor Shaktikanta Das and chiefs of
public and private banks on behalf of the more than 8,000 apparel exporters in
the country.