CMAI recently penned a letter to the Centre welcoming the measures announced by Finance Minister Nirmala Sitharaman, especially those connected with the government’s support to the MSME sector.
According to the association, the enhancing of the upper limits of the sector, the merging of the manufacturing and service sectors, and the addition of a turnover based criteria, will all go a long way in enabling many more enterprises, especially in the garment industry, to take advantage of the various schemes under the MSME umbrella.
Further, the letter stated that the additional loans backed by government guarantee and requiring no collateral or guarantee of the MSME, will enable many of CMAI members to get the much-needed working capital assistance that the industry needs to kick start operations after the lock-down ends. However, it is important that the banks respond to these measures and implement the loan scheme within 4-5 weeks to allow quick start to operations to help the economic growth in the country.
Since a majority of the garment manufacturing units would come under the MSME criteria, CMAI believes that these sets of measures will be a boost for the sector.
The letter further stated, “A similar support is required for garment retailers and traders. Currently, they are not covered by MSME registration. The survival of retailers is important to create demand and avoid bad debts to the MSME manufacturers. Further, many MSME members are dependent on the sub-contract orders from large manufactures, exporters, and retailers. Since, the entire value chain is impacted, support package has to be made available to the entire textile and apparel value chain.”
In the letter, CMAI once again requested the Finance Minister to provide support to small manufactures by providing direct grants in payment of wages for the lock down period and period up to September 2020. According to the association, small manufactures will not be able to sustain the losses from lock down and subsequent slow-down in demand. Absence of such grant could lead to up to 30 per cent of the units closing down permanently leading to 1 crore job losses in the textile and apparel value chain.