Suspension of manufacturing activities due to COVID-19 lockdown has brought financial crisis to textile hubs in Uttar Pradesh
With both the textile hubs of Kanpur and Noida reporting decline in credit (loan), the textile industry has been the worst hit in Uttar Pradesh, suggests the SIDBI-CRIF report on Indian Textiles and Apparels Industry.
This is due to the suspension of manufacturing activities after the COVID-19 lockdown in March 2020 imposed to check the spread of pandemic. When the manufacturing activities were to pick up in December-January the deadly second wave dealt a severe blow to the sector.
The textiles and apparels industry in India is one of the oldest and largest sectors of the economy.
The CRIF is an RBI approved credit bureau in India which provides information about credit-worthiness or credit history of individuals and commercial establishments.
The SIDBI’s report states that the number of active loans (volume), in the sector stood at 4.26 lakh as of December 2020.
During this period, there has been a decline of 42 percent in the credit (loan) in Kanpur region which is one of the two hubs of textile industry in Uttar Pradesh.
Noida and Kanpur textile units face financial crisis: SIDBI-CRIF report
Till December 2020, the credit outstanding portfolio in Kanpur was ₹1,730 crore. The credit portfolio of textile industry in the entire Uttar Pradesh was ₹4,600 crore till December 2020. At present, there are over 10,000 textile and garment units across the state with most of them concentrated in Kanpur and Noida region.
In Noida region of the state there are around 3,000 textile units. Each unit has a minimum workforce of around 100 employees.
Almost all of them are facing financial crisis in the post-pandemic scenario.
Foreign buyers are reluctant to place orders with Noida units as they are apprehensive whether they will be able to fulfill the order due to prevailing Covid-19 condition in India.
“After the grim Covid-19 picture of India was portrayed in international media, foreign buyers are no more placing orders with us. Instead they are moving to Taiwan and Bangladesh,” said Rajiv Bansal, national secretary, IIA, and a garment exporter.
Garment exporters also claim that the Centre has stopped Merchandise Exports from India Scheme (MEIS), an incentive based scheme for exporters from December 31 last.
Against this, the government has launched new scheme Remission of Duties and Taxes on Export Products (RoDTEP) which is yet to be rolled out, said Rajiv Bansal.