Covid-19: Synthetic textile companies seek financial package to pay wages

The demand comes in the wake of closure of factories, wholesale and retail outlets due to the nationwide lockdown announced by the government on March 25

Synthetic textile players have urged the Centre to compensate the expenses being incurred during the 21-day lockdown for paying salaries and wages to employees and costs relating to cancellation or deferment of export orders. 

The demand comes in the wake of closure of factories, wholesale and retail outlets due to the coronavirus (Covid-19) outbreak. 

The lockdown has brought the entire business into a standstill and resulted in massive losses for the entire industry. 

“Extend support to the industry for payment of salaries and wages to workers during the lockdown period similar to that provided by the government of Bangladesh to its textile units. Also, compensate the full expenses being incurred by exporters due to cancellation and deferred orders,” said Ronak Rughani, chairman, the Synthetic and Rayon Textiles Export Promotion Council (SRTEPC), in a meeting held with officials of the textile ministry. 

The Bangladesh government is transferring three months salaries directly to employees/workers through its commercial banks. It said the amount has to be repaid at 2 per cent interest in 18 instalments within a period of two years by employers to the commercial banks.

“The immediate requirement is to allow manufacturing facilities to function at 50 per cent capacity at least and gradually lift the restrictions. There is also a need for creating an environment to export the produce without any hassles from different departments involved in the system. Ensure good support from the banking system by providing moratoriums and enhanced working capital facilities. Another requirement is to ensure duty refunds from the government with immediate effect and provide extra export incentives,” said Madhu Sudan Bhageria, chairman and MD, Filatex India. 

The manmade fibre (MMF) textile segment is one of the worst hit in this epidemic. Huge losses have incurred and there is shortage of funds due to the cancellation and deferred orders. This has put the industry under a ventilator, said SRTEPC.

There is an urgent need for a special corona-relief package to the textile industry, including entire value chain of the MMF textile segment, to tide over the prevailing coronavirus crisis, it added.

To address the problems emerging after the outbreak, the government requires to grant special export incentive of 3 per cent on fibre and yarn, 4 per cent on fabric and 5 per cent on made ups. This has to be for at least six months or till the impact of coronavirus subsides and global markets stabilise. 

Also, a separate package for MMF textiles has been sought as this segment has been reeling from an inverted duty structure under the goods and services tax (GST). 

Additionally, there is a need to enhance working capital limit and advances for exports on a case-to-case basis without any collateral. 

The industry needs to be provided 30 per cent additional working capital at 7.25 per cent interest for both exports and domestic production. This has to be without any collateral and margin money to meet the working capital needs, pay salaries and wages to employees and comply with standing charges.