Outbreak of COVID -19 is causing significant economic turmoil across economies around the world.
Across the globe, shops are closed; brands and retailers have an oversupply situation with whatever orders they have placed.
They are with fear that they may not be able to sell it, so they are cancelling orders or delaying shipments of orders. There has been a sharp drop in domestic and external demand, reduction in trade, disruption in production, fall in consumer confidence, tightening of financial conditions, etc.
Ronak Rughani, Chairman, the Synthetic and Rayon Textiles Export Promotion Council (SRTEPC) representing the manmade fibre textile fraternity congratulate and thanked the government under the leadership of Prime Minister Narendra Modi for taking swift and front-footed actions to fight against the COVID-19 epidemic.
The MMF textile segment is one of the worst-hit in this epidemic. There have been huge losses incurred and a shortage of funds due to the cancellation and deferred orders and that put the industry under ventilators.
Ronak Rughani informed that the Synthetic and Rayon Textiles Export Promotion Council (SRTEPC) has been taking up the issues and difficulties being faced by the exporters of the manmade fibre textiles segment at various platforms.
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Some of the measures requested by the SRTEPC to the government are as given below:
Immediate Measures:
Announce a special Corona-Relief package for the textile industry including the entire value chain of the MMF textile segment to tide over the prevailing coronavirus crisis as detailed below.
Special Export incentive of three per cent on fibre and yarn, four per cent on fabric, and five per cent on made-ups for at least six months or till the impact of coronavirus subsides and global markets stabilise.
A separate package for the MMF textiles segment as this segment has been reeling under Inverted Duty Structure under GST.
Include entire MMF textile value chain viz., fibres, yarns, fabrics, made-ups, etc. under RoSCTL and MEIS benefits.
The entire MMF textile value chain is needed to be covered under the RoDTEP Scheme also.
Extend one-year moratorium with immediate effect till March 31, 2021, for repayment of principal and interest amounts to the banks and NBFCs.
Allow the textile industry to resume functioning of the units at least 50 per cent of the essential working staff.
Include documentation/ paperwork, Certificate of Origin, Testing Reports, etc. also in the "Essential Services" category and issue e-passes to the employees, CHA, officials of EPCs, Testing Agencies/organisations, etc. who are associated with paper-work and documentation such as Testing reports, Certificate of Origin, etc. that are essential for export shipments.
Compensate the full expenses incurred by the exporters due to cancellation and deferred export orders.
Extend support to the industry for payment of salaries and wages to the workers during the lock-down period similar to that of the supports provided by the Government of Bangladesh to its textile units. Bangladesh Government is transferring 3 months salaries directly to the employees or workers through their commercial banks and the said amount is to be repaid @ 2 per cent interest in 18 instalments within a period of two years by the employers to the commercial banks.
Extension of due date of LCs by rollover or providing fund based credit for March and April 2020.
In views of this extreme uncertain and unstable payment situation, it is requested that the Ministry of Finance should help and intervene through RBI in hedging the export payment for a period of at least 180 days.
Special arrangements to be made for couriering necessary export documents both international and National like LC, Agreements, etc. to the importers bank, to the companies, authorized banks on a case -by- case basis.
At the Customs RMS parameters may be tweaked appropriately to reduce the number of containers getting opened for a physical examination which in turn will reduce the requirement of too many CHA, CFS and customs staff, who are otherwise required.
In view of force Majeure situation, CBIC/JNPT/Mundra customs should authorise shipping lines to allow loading of export containers basis verification of LEO against specific shipping bill in the ICEGATE after CHA gives in writing through e-mail, confirming the shipping bill number, date and LEO status without insisting on shipping bill print with LEO.
In Nhava Sheva port, Customs may also allow container RFID seal verification directly at each terminal gate and allow customs LEO at each terminal gate itself. This will reduce the requirement of the number of CHA staff to carry out urgent customs clearance at three different designated parking plazas for GTI, NSICT (DP world), JNPT port terminal. This system of direct terminal gate-in was in operation about two years ago prior to the introduction of a parking plaza system which was done to eliminate the massive congestion in the terminal gates. This will be a major trade facilitation measure.
The period of export payment realization should be increased from 270 days to 365 days and in case of delay in payments beyond the due date, no penal rate of interests should be charged by the banks.
Reduce the freight charges to the pre-coronavirus level and ensure the availability of containers for export shipments.
Extend ECGC support to address the cancelled and deferred orders.
Remove the list of Risky exporters.
Release all pending dues under Drawback, MEIS, GST, ROSL, RoSCTL, TUFS on an urgent basis or extend soft loan equivalent to Government dues pending in the books of individual textile units that could be adjusted soon as the Government clears the dues.
Waive the interest charges for a period of six months on all loans.
Textile industry being a continuous process and predominantly export-oriented industry, advise the State Governments to permit the units run with prescribed pre-conditions.
Allow options to all companies to restructure loans for one year without any additional charges by Banks for provisioning etc.
RBI to relax NPA norms for 6 months so that no default will be eligible for being termed as an NPA account.
Defer payment of ESI contributions to tide over the crisis, since the government is prepared to pay 3 months PF contributions.
Longer Term Measures:
Enhance working capital limit and advances for exports on a case to case basis without any collateral.
Provide 30 per cent additional working capital at 7.25 per cent interest for both exports and domestic production without any collateral and margin money to meet the working capital needs, pay salaries and wages to the employees and meet the standing charges.
Enhance Interest Equalization Scheme (IES) benefit for exports of entire MMF textile value chain viz., fibres, yarns, fabrics, made-ups, etc. to 5 per cent and extend 3 per cent interest subvention for working capital.
Ronak Rughani, Chairman, SRTEPC informed that the MMF textiles segment has already been going through Inverted Duty Structure due to which huge amount of ITC has been accumulated which are neither refunded nor utilisable. Therefore, Rughani categorically mentioned that a separate package for MMF textiles segment.
Further, giving emphasis on the introduction of Special Incentives by the Government Ronak Rughani, mentioned that unemployment is a serious concern in the Textile industry including the Manmade fibre textile segment for which the above-mentioned policy initiatives are extremely important for resuming production bringing stability to the Manmade fibre textile segment after the havoc created by the COVID-19 epidemic.
Ronak Rughani also informed that the Rs 1.70 lakh crore relief package under Pradhan Mantri Garib Kalyan Yojana announced by the Ministry of Finance will be of substantial help for the poor to fight the battle against COVID-19.
Ronak Rughani further stated that in this nation-wide fighting, as a gesture of collective solidarity, the Manmade fibre textile fraternity and its groups contributed around Rs 1016 crores towards the PM CARES Fund and the CMs of various states besides providing hospital facilities, food, PPE, etc.
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