Home Fashion Indian textiles and apparel industry availed credit of Rs1.62 lakh cr: Report

Indian textiles and apparel industry availed credit of Rs1.62 lakh cr: Report

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Small Industries Development Bank of India (SIDBI), the principal financial institution engaged in the promotion, financing and development of Micro, Small & Medium Enterprises (MSMEs), and CRIF High Mark, a leading Indian credit bureau has launched its third edition of Industry Spotlight, which analyses the ‘Indian Textile and Apparels’ industry.

According to the report, the total amount of credit availed by the sector as of December 2020 stood at Rs.1.62 lakh crore, which witnessed a Y-o-Y decline of nearly 20%. This is due to the suspension of manufacturing activities in the immediate aftermath of the COVID-19 lockdown in March 2020. The report also states that the number of active loans (volume), in the sector stood at 4.26 lakh, as of December 2020.

The industry observed a quarterly decline in Non-Performing Assets or NPAs (proportion of credit value delinquent by 90+ days) over the last two years, from 29.59% in September 2018 to 15.98% in September 2020. NPAs in December 2020 increased by 0.94% which is nearly 8% lower than NPAs in December 2019.

With 95% of the overall credit by volume of the sector concentrated in micro, small and medium segment of borrowers, the industry has a presence of close to five lakh borrowers as of December 2020.

At the state level, Maharashtra has the largest share of the credit portfolio at 25% of the credit book to the sector.

The report emphasizes that the top 13 regions rich in textiles and apparels manufacturing accounted for 80% of the credit portfolio of the sector as of December 2020. Nearly all states have districts manufacturing textiles and apparels, having several credit active units. Some districts such as Mumbai and Surat have more than Rs. 10,000 crore credit portfolios as of December 2020.

Sivasubramanian Ramann, Chairman and Managing Director, SIDBI said, “The textiles and apparel industry in India is one of the oldest and largest sectors of the Indian economy and critical to the country’s employment story. The sector is the fifth largest in exports, contributing to 12% of the country’s export earnings and 2% to GDP. India is a world leader in textiles and possesses the entire manufacturing value chain. The Union Budget 2021-22 has taken into consideration the needs of all sectors of the economy in the quest for the $5 trillion economy and accordingly, in order to enhance India’s textiles competitiveness globally, the scheme for Mega Integrated Textile Regions and Apparel Parks (MITRAs) was announced that will create world class infrastructure with plug n play facilities for the domestic market to showcase steep recovery.”

Navin Chandani, MD & CEO, CRIF India, said, “Despite the pandemic, the top thirteen regions active in textiles and apparels manufacturing constituted 80% of the credit portfolio as of December 2020. In India, each state has a unique contribution to the apparels and textile sector. The Government of India announced a special economic package in May 2020 under the Atmanirbhar Bharat program that is set to benefit the large number of small-scale entities, including the weavers and artisans across the country. The right policy interventions, abundant availability and fair access to raw materials along with the surplus available labour can further boost the development of this crucial sector.”