Feedback Here

fbook  tweeter  linkin YouTube
Global contents also translated in Chinese

Textile clusters in Kanpur and Chennai-Kancheepuram witness highest loan delinquencies


A new survey by SIDBI-CRIF shows, textile clusters in Kanpur and Chennai-Kancheepuram have been worst hit by the COVID-19 pandemic, with the highest proportion of loans turning delinquent by December 2020.

The survey report reveals, since the imposition of national lockdown in March last year, India’s textiles industry has been in deep trouble with outstanding credit to the sector falling 20 per cent year-on-year by December 2020 and loans to export units falling by a sharper 25 per cent.

The SIDBI survey also highlights, the sector faces several operational roadblocks at the ground level, including high fuel and raw material prices, challenging GST norms and delayed tax refunds.

Almost 82 per cent of loans extended to textile units in Kanpur had turned delinquent by December 2020, with the Chennai-Kancheepuram belt reporting a delinquency rate of 42.6 per cent of outstanding credit. Loans are labelled delinquent after past dues accumulate for more than 90 days.

The Pune-Kolhapur belt, and the Ludhiana-Jalandhar-Amritsar textile region reported delinquency rates of 32 per cent and 29 per cent in the same period. Ahmedabad and Tiruppur-Coimbatore-Madurai recorded the lowest proportion of loans going bad, at 8.24 per cent and 8.6 per cent, respectively, compared with the overall delinquency rate of 16.4 per cent in the textiles sector.

Among micro, small and medium textile enterprises, the textiles cluster in Punjab reported the highest delinquencies at almost 25 per cent, followed by Chennai-Kancheepuramand Hyderabad-Guntur.

Further the SIDBI survey found that ongoing changes in the GST portal and filing of returns has created confusion for units, with exporters stating that getting Integrated GST refunds is a ‘major challenge’. Most units said access to working capital was a challenge and cash flows were constrained, while ‘ever-increasing fuel prices’ have escalated transport costs. The rise in yarn and other raw material prices, and fluctuating cotton prices, are also difficult to cope with, even as export orders have slowed down due to COVID-19, the survey found.