As the apparel industry suffers the severe onslaught of COVID-19 pandemic, the Apparel Export Promotion Council (APEC) has approached Prime Minister Narendra Modi for the government's intervention to treat the labour-intensive sector at par with the MSME sector.
In a letter to the Prime Minister, AEPC Chairman A. Sakthivel said: "We would request that the apparel exporting industry may be treated at par with the MSME sector as we work on wafer-thin margins of 4-5 per cent and with a high-labour force with labour wages forming 25-30 per cent of the product cost. Herewith, we request you to kindly consider the following at par with MSME sector."
The Chairman said the present crisis is the biggest challenge faced by the apparel export industry, which is facing huge losses due to non-payment of export bills and cancellation of export orders.
"Huge stocks are with us and every apparel exporter is facing severe financial crisis. You will also appreciate that the apparel export industry is one of the largest employers of the country employing 12.9 million directly and is also one of the largest employers of women who form 65 per cent of the workforce," he said.
Sakthivel said that while the apparel exporters are thankful to the government for various important decisions to revive the sector, including the permission to export non-surgical and non-medical masks, they would want the government to consider some of their issues of considering them at par with the MSME sector.
The benefit of payment of 12% of employer and 12% employee contributions towards EPF accounts of eligible establishments, extended by another 4 months (April-July 2020), is also a very welcome step, he said.
"However, it is strongly suggested that this benefit be granted irrespective of the number of workers employed and more specifically to cover all the apparel exporting units, which may kindly be notified as eligible establishments since they are highly labour-intensive with a huge female workforce," the Chairman said.
A large number of our exporters lost huge money by booking forward contracts and we feel that the loss can be converted into a working capital-term loan with a repayment in three years with 6% interest, he added.
Sakthivel also wished that the facility of granting additional working capital to all MSMEs without collateral may also be granted to all apparel exporting units, irrespective of their size.
"The benefit of Interest Equalisation Scheme extended earlier this week by one year may kindly be extended by at least two years and the benefit of 5 per cent may kindly be extended to all apparel exporting units at par with MSME Sector," he requested.