Industry body highlights liquidity support measures for textile sector affected by rising logistics costs and geopolitical disruptions

The textile industry has continued to face financial and operational challenges arising from the prevailing geopolitical situation in the Middle East, according to SIMA.

The industry body stated that the sector remains dependent on the region for key raw materials used in the man-made fibre segment, while exports of value-added textile products have been impacted by higher logistics costs and changing consumer spending patterns favouring lower-cost products.

SIMA noted that the Emergency Credit Line Guarantee Scheme (ECLGS), introduced by the Government in 2020 during the COVID-19 period, had provided liquidity support to MSMEs and business enterprises for meeting operational liabilities.

The association added that the second version of the scheme was subsequently introduced with enhanced eligibility norms and a credit cap of up to Rs.500 crores for stressed sectors, including textiles, following improvements in PMI and export performance.

According to SIMA, the textile sector is currently facing challenges related to inadequate working capital required to maintain manufacturing operations, retain workforce, procure raw materials, and service existing bank loans.

The industry body also referred to government initiatives focused on export risk mitigation, logistics and trade facilitation, and the development of new international markets through FTAs aimed at supporting exports and maintaining global competitiveness.

Durai Palanisamy (Chairman) SIMA

In a press release issued today, SIMA Chairman Mr. Durai Palanisamy has profusely thanked Hon’ble Prime Minister Shri Narendra Modiji, Hon’ble Minister for Finance, Hon’ble Minister for Commerce & Industry and Hon’ble Minister for Textiles, Government of India for introduction of ECLGS 5.0. Timely and much-needed initiative that has significantly benefited the industry by providing additional liquidity support to businesses impacted by recent global disruptions, particularly the West Asia crisis.

Mr Durai highlighted that the scheme extends support to both MSME and non-MSME sectors, with loan tenure of up to five years and loan sanction availability up to 31st March 2027. The scheme also includes a moratorium of one year on principal repayment.

According to SIMA, the scheme provides additional credit of up to 20% of the peak working capital as of Q4 FY26, subject to a maximum cap of Rs.100 crore per borrower. The association stated that the facility is collateral-free and does not carry any guarantee fee.

SIMA stated that ECLGS 5.0 is expected to support production continuity, employment protection, and the textile sector’s contribution to exports and economic growth, particularly during a period of frequent increases in raw cotton prices.

The association further stated that the ECLGS scheme, along with the TEEM scheme and the Mission for Cotton Productivity approved in the recent Union Budget with an outlay of Rs.5659.22 crores, is expected to support industry growth and competitiveness in domestic and global markets.