At a brainstorming session on ‘Credit Access Issues in the Textile Sector,’ Neelam Shami Rao, Secretary, Ministry of Textiles, urged industry stakeholders to develop a textile-centric credit rating system to boost credit flow in the sector.
Chaired by Rao, the session brought together industry representatives, financial institutions, and policy stakeholders to discuss potential solutions. The Ministry of Textiles has already conducted a detailed study on the credit access challenges confronting the textile sector, particularly its Micro, Small, and Medium Enterprises (MSMEs). A comprehensive document outlining these issues and proposing solutions, capturing consistently reported industry concerns, has been shared.
Organized by the Confederation of Indian Textile Industry (CITI), the session heard industry representatives highlight difficulties in securing working capital. They noted that banks often lack a nuanced understanding of the textile sector's specific characteristics, such as long payment cycles and job work arrangements. These sector-specific nuances were identified as areas requiring better recognition by financial institutions to enhance credit accessibility.
A significant hurdle identified was the prevailing risk perception of the textile industry under existing credit rating systems, which underscores the urgent need for a dedicated, textile-specific framework.
Discussions also touched upon existing funds designed to support sustainable production, including those for energy efficiency and water management. Stakeholders suggested consolidating these into a single "Green Fund" to streamline investment support for the textile sector, and industry members have been invited to submit their suggestions on this proposal.
Regarding the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme, while operated by the Department of MSME, the textile industry reported challenges in accessing it, leading to low utilization by textile MSMEs. It was recommended that disbursements under this fund be closely monitored to improve its efficiency and relevance for the sector.
Finally, acknowledging the widespread awareness and procedural hurdles related to existing credit schemes, the establishment of cluster-level credit facilitation centers was proposed as a way to simplify access for businesses.
