Amid the ongoing coronavirus outbreak which is taking a toll on several businesses, Tirupur Exporters Association (TEA) on Monday (March 16) wrote to Union Finance Minister Nirmala Sitharaman seeking help to bail out the textile units from the financial crisis.
In the letter, the association’s president Raja M Shanmugham urged the finance minister to take proactive steps and with immediate effect advice the banks not to categorise the units as non-performing assets (NPA) for being unable to repay the loans and provide at least one year moratorium which helps MSMEs to sustain the business amidst the crisis.
Shanmugham cited examples of European countries, including Italy and Spain asking their members not to export garments to them for a minimum period of one or two months till the situation resume to normal.
“Some of the buyers, apart from cancelling the orders, they are differing the payment against the promise for already sent goods,” he said.
A slew of financial measures, including the reduction of bank interest rates and cash reserve, debt moratorium provided to MSMEs, deferment of loan and tax payment without interest, announcement of new bridge loans and credit guarantees, have been taken by the several developed nations such as the United States of America, Germany, Italy, France, United Kingdom, and Japan.
According to Shanmugham, these countries have pumped in “billions of dollars” to bring the industries back to normalcy and the US Federal Reserve has, in fact, cut its key interest rate to virtually zero.
Even before the exporters feel the heat, it was the small scale industries and dyeing units in Tirupur, who were forced to take the burden of a rise in the price of the dye making products after the import of raw materials for dyes were stopped from China.
According to the small scale industries, the price of the dyes have gone up to 30% which is also impacting the cost of production.
Shanmugham said that apart from a year of moratorium, the stimulus financial package measures are also required to reenergise the market economy at this critical juncture. “The quantitative easing methodology is required in the hour of crisis to revive back the economy and uplift the business confidence of entrepreneurs,” he said.