Poor credit availability is posing serious problems for Tirupur garment manufacturers. One problem is that exports from Tirupur have been stagnant. Banks are becoming averse to risk. There has been a rise in non-performing assets (NPAs) in the country. Bank officials fear their decisions will be questioned if the loan turns into a non performing asset.
Tirupur has predominantly small and medium enterprises whose working capital requirements are huge. They are seeking an expansion in credit limits. Many apparel manufacturers feel the need for a concept change in NPA norms. Their opinion is that NPA in the present context is a wrong connotation under Basel norms, which is a banking supervision accord. They want India to take up the issue to either modify the Basel norms to suit the Indian industrial climate or shift small and medium units from Basel norms regulations.
The Index of Industrial Production contracted 4.3 per cent in September, the worst fall in eight years. The share of Tirupur knitwear exports in India’s total garment exports is 20 per cent. Exporters want a one-time long term initiative to be undertaken to uplift the skill proficiency of existing laborers in order to increase productivity at par with competing countries and at the same time reduce waste.