Govt likely to extend 2-year debate moratorium for textile units

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The government plans to extend the two-year moratorium for debt repayments by textile units struggling because of goods and services tax (GST) refund delay, said sources in the textiles ministry. The sources said the finance ministry is set to approve the textiles ministry’s recommendation on the moratorium. “The textile industry is facing huge liquidity problems due to delay in refund of the Merchandised Export from India Scheme (MEIS) and Goods and Services Tax (GST). This is hurting business sentiment. The industry needs immediate ease of liquidity crisis for improvement in business sentiment.

The two years of moratorium on debt repayment to banks would help improve liquidity for textile units,” said Rahul Mehta, president of Clothing Manufacturers Association of India (CMAI). The industry has formed the National Committee on Textiles & Clothing (NCTC), which comprises various groups under the chairmanship of T Rajkumar. NCTC has urged the government to place recycled polyester staple fibre under 5 percent of GST rate. It urged the government to release pending tax rebate claims and reduce margin money for working capital from 25 percent to 10 percent and the debt-equity ratio norm from 1:1.33 for the textiles industry.

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