28 Jan '25
(Fibre2Fashion News Desk (KUL): In view of the upcoming Union Budget 2025-26 to be presented by Finance Minister Nirmala Sitharaman on Saturday, February 1, The Clothing Manufacturers Association of India (CMAI) has submitted key recommendations, seeking crucial policy interventions to support the domestic garment sector.
Insights
CMAI has urged the government to provide interest subvention for MSMEs, expand the PLI scheme, and phase in Section 43B(H) to ease financial strain.
It also calls for MSMEs to be secured creditors in NCLT cases and a review of the Bangladesh FTA to curb duty-free imports of Chinese fabrics.
These steps are crucial for sustaining India's growing $102 billion apparel market.
Given its role in employment generation—especially for women and marginalised communities—CMAI has emphasised the need for financial relief, extended payment cycles, and trade policy revisions to ensure industry sustainability.
Key Recommendations:
Interest subvention for MSMEs
CMAI has called for a government-backed interest subvention scheme to ease the financial burden on garment manufacturers.
The association proposes a reduced interest rate of 7 per cent per annum, further reduced to 4 per cent for prompt repayment, similar to the agriculture sector’s Priority Sector Lending (PSL) scheme.
MSMEs as secured creditors in NCLT cases
MSMEs often face severe financial losses during corporate insolvency proceedings.
CMAI urges their recognition as secured creditors under the National Company Law Tribunal (NCLT) to ensure equitable treatment and financial security.
PLI scheme expansion for garments
While the existing Production Linked Incentive (PLI) Scheme has supported textiles, its focus on synthetic products has limited its impact on the garment industry.
CMAI has recommended its expansion to cover all apparel categories, helping India increase its global market share from the current 3 per cent to nearly 6 per cent in the next 4-5 years.
The association also suggests lowering the minimum investment threshold from ₹100 crore to ₹12-15 crore to encourage wider participation.
Gradual implementation of Section 43B(H)
The amendment to Section 43B(H) of the Income Tax Act mandates a 45-day payment cycle for MSMEs.
However, CMAI argues that a one-size-fits-all approach is impractical, as apparel sector payment cycles typically range from 90 to 180 days.
The association proposes a phased implementation—90 days in year 1, 60 days in year 2, and 45 days in year 3—to prevent disruptions.
FTA review with Bangladesh
Duty-free garment imports from Bangladesh currently account for 43 per cent of India’s total apparel imports and are growing at over 40 per cent annually.
CMAI has highlighted concerns over the influx of Chinese fabrics entering through backdoor channels under the free trade agreement (FTA).
The association has urged the government to review the FTA and restrict duty-free imports to garments made from Indian fabrics, ensuring fair competition for domestic manufacturers.
With India’s apparel market poised to grow from $102 billion to $180 billion by 2030, CMAI asserts that these policy changes are critical for industry growth, employment generation, and sustainability. (Source: Fibre2Fashion.com)