Business Bureau :
The coronavirus outbreak is impacting the global supply chain of goods and the government should immediately extend support to the apparel sector to promote shipments, apparel exporters body AEPC said on Tuesday. In a letter to Finance Minister Nirmala Sitharaman, Apparel Export Promotion Council (AEPC) Chairman A Sakthivel said many members of the council are facing serious concerns in terms of working capital, inventory pile up, postponement of orders, credit rating and export realisations. He requested “immediate intervention to maintain the viability of apparel exporters in the country”. Recognizing the volatilities in the global apparel markets and order postponements/ cancellations, he said the sector needs full support of financial institutions.
“We believe the current situation in the sector is extremely grave which warrants urgent remedies. In absence of such relief measures, NPAs may increase, impacting the sector's overall credit ratings,” he added. Sakthivel said 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 said. Anticipating the imminent adverse impact on export realisations and working capital for the industry, mainly the MSMEs who are finding it difficult to even pay the wages, he suggested nine steps as part of the immediate relief.
The measures include faster clearance of banking and packing credit, extension of packing credit period from 270 days to 360 days, extension of bill realisation period by RBI from nine months to one year, and delay in declaring companies accounts as NPAs. Other suggestions are RBI exempting exporters from caution listing for at least a year, enhancing existing limits for advances of exporters by 25 per cent, increase in collateral free lending up to Rs 2 crore by banks, and extending the enhanced 5 per cent Interest Equalisation Scheme to all apparel exporters.
“The interest subsidy scheme may kindly be extended for a period of 2 years up to March 31, 2022,” he said. Sakthivel also wrote similar letters to RBI Governor Shaktikanta Das and chiefs of public and private sector banks on behalf of more than 8,000 apparel exporters in the country.