Government Extends Relief to Textile Exporters Amid Crisis: SIMA

SIMA welcomes key financial relaxations as the textile industry faces export and liquidity pressures.

The Indian textile sector receives crucial relief as the government announces loan moratoriums and extended export realisation periods, providing temporary stability to an industry battling tariffs, demand drops, and financial stress.

The Central Government’s announcement on 14 November 2025, introducing a moratorium on term and working capital loan repayments along with an extension for export proceeds realisation, has come as a crucial and timely support measure for the distressed textile industry. These interventions offer immediate relief to businesses grappling with tightening cash flows and delayed payments from international buyers.

India’s textile and apparel sector—an industry that contributes 2–3% to the national GDP and 12–14% to merchandise exports—is currently undergoing one of the toughest phases in its history. The imposition of a 50% tariff by the United States, combined with geopolitical disruptions across key export destinations, has severely impacted global competitiveness. This situation threatens long-standing export markets, financial stability, and the livelihoods of millions who depend on the sector.

Export performance reflects the strain: India’s textile and apparel exports fell 10.34% in September 2025, compared to the same month last year. Shipments of cotton yarn, fabrics, made-ups, and handloom goods dropped 11.66%, while apparel exports declined 10.14%. Production across decentralized powerloom, knitting, and garment clusters has been disrupted by 25–70%, and subdued global demand has squeezed revenues and eroded margins. With 82% of companies extending credit cycles by three to six months, liquidity pressures have intensified. Exporters are additionally grappling with cancelled orders, as buyers shift toward countries with lower tariff exposure—putting long-term customer relationships at risk. Employment is now under threat across a sector that directly supports over 45 million workers, as units cut operations or temporarily shut down.

In a press release, Mr. Durai Palanisamy, Chairman, Southern India Mills’ Association (SIMA), conveyed heartfelt thanks to the Hon’ble Prime Minister Shri Narendra Modi, Hon’ble Finance Minister Smt. Nirmala Sitharaman, Hon’ble Commerce & Industry Minister Shri Piyush Goyal, and Hon’ble Minister of Textiles Shri Giriraj Singh for approving a moratorium and deferment on term and working capital loan repayments for the period 1 September to 31 December 2025, specifically benefiting the readymade and made-ups segments under HS Codes 61, 62, 63, and 94.

To further support exporters facing unprecedented disruption, the Reserve Bank of India has extended the export proceeds realisation period from nine months to fifteen months. Additionally, the maximum credit period for pre- and post-shipment export credit has been increased from one year to 450 days, applicable for export loans disbursed up to 31 March 2026. Banks have also been instructed to either relax margin requirements or increase drawing power, ensuring businesses have improved access to working capital.

Mr. Durai emphasized that these measures significantly ease cash flow challenges and lower financial stress during an extremely difficult economic period—without imposing excessive interest burdens. Exporters now have more time to manage operations, stabilize working capital, and recover export payments.

He further urged the government to expand these relief measures to the spinning, weaving, and processing segments, which fall under HS Codes 52, 54, 55, and 60. These capital-intensive sectors are facing severe financial distress and risk turning into NPAs. Since they supply essential yarns and fabrics to the readymade and made-ups sector—whose procurement has sharply declined due to export disruptions—supporting them is critical to stabilizing the entire textile value chain.