The Clothing Manufacturers Association of India (CMAI) acknowledges the well-intentioned efforts of the Government of India in introducing the MSME Payment amendment to the Income Tax under Section 43 (b) (h), to address the challenges related to delayed and non-payment faced by the MSME sector.
While the government’s intentions are commendable, the specific dynamics of the Textile Industry, particularly the Domestic Garment Industry, have resulted in significant adverse consequences due to the amendment.
Speaking about the consequences, Mr. Rajesh Masand, President, CMAI, said, “The protracted issue of delayed payments within the MSME sector has long hindered its growth, and it is commendable that the Government has taken steps to tackle this systemic challenge.
Some of the inherent characteristics of the Garment Industry highlighted in the submission are:
· The Garment Industry, being extremely fragmented and informal in nature, is hugely dependent on intra-sector credit support extended among its players, and does not enjoy credit facilities provided by the formal Banking Sector.
· The normal credit period in the industry ranges from 90 to 120 days, often extending to 180 days.
· A major portion of the industry lies in the informal sector, which, though curtailed to some extent post the introduction of GST, is still a considerable force to recon with, and a serious competitor to the smaller players in the formal sector.
