Industry And Cluster | News & Insights

Five times hike in MSME limits, a great relief for the textile industry – SIMA

Published: June 2, 2020
Author: TEXTILE VALUE CHAIN

Under “AtmaNirbhar Bharat Abhiyan” Scheme, the Government has announced a slew of financial relief measures to enable the country to tide over the unprecedented economic crisis being posed by COVID-19. In the said Scheme, the Government has focused on farmers and MSMEs. Today, the Cabinet Committee has announced further relief measures focusing on farmers and MSMEs and also hiking the MSP for 14 kharif crops including cotton.

In a Press Release issued here today, Mr.Ashwin Chandran, Chairman, The Southern India Mills’ Association (SIMA) has stated that considerably increasing the investment and sales turnover thresholds for MSMEs, will significantly benefit various segments of the textile value chain. He stated that prior to the recently announced changes, the investment limit for a medium sized industry was only Rs.10 crores when compared to the new limit of Rs.50 crores. Increasing the sales turnover limit to Rs.250 crores from the recently announced turnover of Rs.100 crores, while excluding export sales turnover from this calculation, would greatly benefit the highly labour intensive and fragmented textiles and clothing industry. Since most of the decentralized sectors especially powerloom, handloom, knitting, processing, embroidery, garmenting and made-up segments operate on job work basis and where traders play a major role, the new definitions would encourage consolidation and modernization of the decentralized sectors. This will improve economies of scale, help boost exports and also help to grow the domestic textile and clothing industry.

Mr Ashwin has welcomed the allocation of Rs.4,000 crores towards distressed fund to bailout MSME units under NPA category and also allocating Rs.10,000 crores fund on fund to enable the high performing MSME units to get listed in the stock market and gain advantage.

SIMA Chairman has appealed to the Government to consider modifying the definition from “investment and turnover basis” to “investment or turnover basis” to further extend the benefits to the capital intensive sectors of the textile industry viz., spinning, weaving, processing and technical textiles. This will encourage modernization and increase scale of operation so that these segments can improve their global competitiveness.

SIMA Chairman welcomed the MSP increase of 4.75% for medium staple cotton and 4.95% for long staple cotton that would greatly benefit the cotton farmers and sustain the area under cotton cultivation. The minimum support price for seed cotton (kapas) for medium staple has been increased from Rs.5255/- to Rs.5515/- per quintal and for long staple, it has been increased from Rs.5502/- to Rs.5825/- per quintal. Increasing the minimum support price is not a sustainable solution and the Government needs to focus on bringing back the Technology Mission on Cotton in a revised format, to increase the productivity which is half that of other major cotton producing countries, improve quality by reducing contamination and trash cotton by adopting global best practices, says SIMA Chairman. He has also pointed out that with the current market price for cotton and expected accumulation of stocks due to COVID-19, the Government would need to allocate huge funds for the forthcoming cotton season as the country would produce at least 25% higher than the domestic requirement, apart from a carryover of 125 to 150 lakh bales of closing stock in the current season.

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