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TEA Requests Finance Ministry To Extend the Moratorium Up To 31st March 2021

Image courtesy: Tirupurexporterscompany.com

Tirupur:

Port Wings News Network:

Tirupur Exporters Association (TEA) has requested the Prime Minister Narendra Modi to advice the RBI to extend the moratorium for another seven months — from 1st September 2020 to 31st March 2021– as the financial situation of Tirupur knitwear garment units has not improved, and they are not in a position to repay the loan and interest.

Shri. Raja. M. Shanmugham, President, TEA, pointed out that in the first quarter of current financial year 2020-21, the All India Knitwear Exports clocked Rs. 5,355 Crores against Rs. 13,570 Crores recorded in the corresponding period of last year with a negative growth of 60.54% which is reflecting the status of knitwear garment exporting units.

He said the extension of moratorium will be not only beneficial to the Industry and Banks, but also to the wellbeing of our country’s economy and help to attain feel good factor across the board.

As the MSME units’ whose Credit exposure more than Rs. 25 Crore are deprived of receiving the Emergency Credit Line Fund now, Shri. Raja. M. Shanmugham said by denying the benefit, the real intension of the Government to extend crucial support to all MSMEs to bailout from the impact of COVID-19 Pandemic would not served and therefore, RBI should relax the condition and permit even those MSMEs which are having Credit exposure more than above Rs. 25 Crore also to get 20% of outstanding credit by keeping a maximum limit of Rs. 25 Crore.

Shri. Raja. M. Shanmugham said he has sent similar representation to Smt. Nirmala Sitharaman, Union Minister of Finance and Minister of Corporate Affairs, Shri. Nitin Gadkari, Union Minister of Road Transport and Micro, Small and Medium Enterprises, Shri. Shaktikanta Das, Governor, RBI and Shri. A. K. Sharma IAS., MSME Secretary.

Shri. Raja. M. Shanmugham also said he has sent a representation to Shri Edappadi K. Palaniswami, Chief Minister, Government of Tamil Nadu to use his good offices and help for extension of moratorium up to 31st March 2021. He further said a representation has also been sent to Shri. K. Shanmugam, IAS, Chief Secretary, Government of Tamil Nadu.

Below is the reproduction of the letter sent to the Prime Minister’s Office

Respected Sir,

SUB: REQUISITION TO ADVICE TO EXTEND THE MORATORIUM FOR ANOTHER SEVEN MONTHS UP TO 31ST MARCH 2021 -REG

We would like to thank the Hon’ble Prime Minister for laying out comprehensive vision to spur growth and become Self-reliant India with a focus on Aatma Nirbhar Bharat package Vision and also for further upward revision of MSME definition.

We wish to note that Tamil Nadu State Government has announced an extension of the lockdown to curb the COVID-19 spread across the state till 31st August 2020 and public bus transport shall remain suspended, which affects the workers, particularly women workers to turn up for the jobs.

Moreover, the migrant workers have gone back to their respective states. Sir, in the first quarter of current financial year 2020-21, the All India Knitwear Exports clocked Rs. 5,355 Crores against Rs. 13,570 Crores recorded in the corresponding period of last year with a negative growth of 60.54%.

May we be permitted to note that we witness a gradual improvement in the month of July 2020, and the cause of concern is that even now the garment units in Tirupur are running partially with an average capacity utilization of 40%-50%. It is to be noted that there has been no significant improvement in

garment purchase in EU and US markets till now and as a result of this buyers have been placing orders gradually in slow pace manner.

With this difficult position, the garment units are struggling to meet their financial end and fulfill the statutory monthly commitments also. In view of the extension of the lockdown and continuing disruptions on account of COVID-19, We have been requesting the Government from day one for providing moratorium for One year and in this line, we request the Hon’ble Prime Minster to kindly

advice Finance Ministry and RBI for extension of moratorium on term loan instalments and working capital facilities by another Seven months, from 1st September 2020 to 31st March 2021.

Sir, the extension of moratorium will be not only beneficial to the Industry and Banks, but also to the wellbeing of our country’s economy and help to attain feel good factor across the board.

MSMEs CLASSIFICATION – EMERGENCY CREDIT LINE GUARANTEE SCHEME (ECLGS)

We wish to note that Borrowers with up to Rs. 25 Crore outstanding as on Feb 29, 2020 and up to Rs. 100 Crore annual turnover for FY 2020 are eligible for Emergency Credit Line Guarantee Scheme (ECLGS).

Sir, further to upward revision of Medium enterprises definition, where the investment in Plant and Machinery or Equipment does not exceed fifty crore rupees and turnover does not exceed two hundred and fifty crore rupees, more number of knitwear garment exporting units in Tirupur have been fit into the definition of MSME. Despite this, the MSME units’ whose Credit exposure more than Rs. 25 Crore are deprived of receiving the Emergency Credit Line Fund, as their outstanding exceeds Rs. 25 Crore and we wish to note at this juncture that, the real intension of the Government to extend crucial support to

all MSMEs to bailout from the impact of COVID-19 Pandemic need to be done across all MSMEs. It is necessary to extend the liquidity support to MSMEs having credit exposure more than Rs. 25 Crore also, mainly to bring them back to operationalize their units to the normalcy level, do exports and continue to

provide employment.

Considering the gravity of the situation, we request the Hon’ble Prime Minister to advice RBI to relax the condition and permit even those MSMEs which are having Credit exposure more than above Rs. 25 Crore also to get 20% of outstanding credit by keeping a maximum limit of Rs. 25 Crore.

We are optimistic that with the implementation of financial measures as requested by us would certainly bring back our industry and place in growth trajectory.

Thanking you

Yours faithfully

Raja M Shanmugham

President

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