The Finance Ministry is considering a proposal of the textile ministry to extend the two-year moratorium for debt repayments by struggling textile units.
“The ministry is considering the proposal by the textile ministry to extend the two-year moratorium for debt repayments by textile units. This is a job intensive sector and there is stress. While the ministry has already taken steps to boost liquidity, giving some time for debt payment, which will ease them from the financial burden,” a senior official from the Finance Ministry told this publication.
The official said the textile sector had flagged concerns over the delay in Goods and Services Tax (GST) payment, which is a cause of concern. Earlier, the textile sector has sought immediate release of refunds under various government schemes to ease the liquidity crunch faced by manufacturers and exporters. In a joint memorandum presented by seven national-level textile associations and major export promotion councils to the government, the industry said that textile units are facing acute liquidity issues.
“As the textile industry is a capital-intensive, it is requested that there should be no cap to a borrower as has been extended in case of MSMEs that is `25 crore as on January 1, 2019. It is requested that MSMEs debt restructuring package may be extended for the entire industry as this would save many companies from turning into NPAs,” said T Rajkumar, chairman, Confederation of Indian Textile Industry.
It further said the government should take steps to release the refund arrears under GST and another scheme. “GST refund was a matter of concern. The ministry is working on it and is trying to reduce the refund delay,” the official added. The industry also requested that remission of duties or taxes on export product scheme should cover all products in the textile value chain as it is the reimbursement of duties and taxes paid.
The three per cent interest subvention scheme for export products should be raised to five per cent for all textile and clothing products.
Apart from the textile industry, it had also requested the government to place recycled polyester staple fibre under five per cent of GST rate.