Industry And Cluster | News & Insights

Hike in MSME limits is relief for textile industry: SIMA

Published: June 3, 2020

Considerably increasing the investment and sales turnover thresholds for MSMEs will significantly benefit various segments of textile value chain, The Southern India Mills’ Association (SIMA) has said. It has also welcomed the increase in minimum support price (MSP) of cotton as it would benefit cotton farmers and sustain the area under cotton cultivation.

The government has focused on farmers and MSMEs under its Atmanirbhar Bharat Abhiyan, a slew of financial relief measures to enable the country to tide over the unprecedented economic crisis being posed due to the COVID-19 pandemic. Subsequently, the Cabinet Committee has now announced further relief measures focusing on farmers and MSMEs and also hiking the MSP for 14 kharif crops including cotton.

Prior to the recently announced changes, the investment limit for a medium sized industry was only ₹10 crore when compared to the new limit of ₹50 crore. Increasing the sales turnover limit to ₹250 crore from the recently announced turnover of ₹100 crore, while excluding export sales turnover from this calculation, would greatly benefit the highly labour-intensive and fragmented textiles and clothing industry, SIMA chairman Ashwin Chandran said in a press release.

“Since most of the decentralised 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 modernisation of the decentralised sectors. This will improve economies of scale, help boost exports and also help to grow the domestic textile and clothing industry,” Chandran said.

He also welcomed the allocation of ₹4,000 crore towards distressed fund to bailout MSME units under NPA category and also allocating ₹10,000 crore fund on fund to enable the high performing MSME units to get listed in the stock market and gain advantage.
He, however, appealed to the Government to consider modifying the definition of MSMEs 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 modernisation and increase scale of operation so that these segments can improve their global competitiveness.”

SIMA chairman also welcomed the MSP increase of 4.75 per cent for medium staple cotton and 4.95 per cent 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 ₹5,255 per quintal to ₹5,515 per quintal. For long staple, it has been increased from ₹5,502 to ₹5,825 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,” said Chandran.

He 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 per cent 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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