‘By the time the goods that were sent from December onwards reached stores in Europe, they became dead inventory as the stores there were closed by then.’
‘Those that were in the warehouse there also became dead inventory. Those that reached the ports there also became dead inventory.’
‘And what Tirupur produced in March is still here, and they have also become dead inventory.’
IMAGE: A garment factory in Tirupur, Tamil Nadu. Photograph: Kind courtesy Raja Shanmugham/Tirupur Exporters Association
Today, Bangladesh, Vietnam, Cambodia and Sri Lanka have gone ahead.
More than 50% of the knitwear exports from India happen from Tirupur, a small town in Tamil Nadu with an export of garments worth Rs 30,000 crore in 2019.
There are over 10,000 garment manufacturing units in Tirupur, employing over 600,000 people out of which 250,000 are migrant labour.
“When there has not been any economic activity for three months, how will this moratorium of three months help the industry?” Raja Shanmugham, below, president, Tirupur Exporters Association, asks Shobha Warrier/Rediff.com. The first of a two-part interview:
The government has granted a reprieve of 20% of the working capital to be drawn from the bank.
But the negative side of it is, since the lockdown has been extended till May 31, no business is going to happen immediately.
So whatever moratorium is declared by the RBI will expire by the end of May.
It means no company will be in a position to pay older dues pending with the banks from June 1 onwards.
In effect, whatever package given to the MSME is going to be drained by the banks.
It is like, from one hand they are sanctioning loans, and from the other hand they are taking it back to the system. This is neutralising the whole exercise.
In effect, the package becomes meaningless as the sector is totally crippled.
In a situation like this, a revival of the industry should be the first priority.
The government should provide a moratorium of one year for existing loans. Only then the infusion of fresh working capital will work.
So, you don’t see a revival happening with this package?
Obviously. They should know this fact. The moratorium is not good enough as for a place like Tirupur, from the beginning of March…