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CMAI Survey: Industry worried about wages, factories closing and job losses

CMAI conducts survey on its members ability to pay wagesCovid-19, has stalled the cycle of the apparel value chain. CMAI has been interacting with members to understand the impact of the Covid-19 on the domestic apparel industry. The association recently conductrd a survey among its members – to understand their ability to pay wages and salaries to their workers over the next few months:

Results of the survey include:

98 percent of memebers are concerned about the welfare of their workers: Workers (karigars) are the most important members of the MSME unit. For business owners these workers are an extended family.

92 per cent have paid wages and salaries to their workers for March: Although factories closed down on March 18, 92 per cent of CMAI members have paid wages and salaries for the whole month of March. Members have collected only 30 per cent of the receivable for March, leading to significant cash crunch. Many of the Members have had to take loans to pay the March wages.

Majority members will not be able to pay wages for April & May: Around 67 per cent of the members have revealed that they will not be able to pay wages for April. With Zero sales and collection, NO support for additional Working Capital from Banks, factories don’t have the funds to pay wages. Non-payment of wages could lead to significant unrest. CMAI members are worried that owners may not be able to visit their factories, if wages are not paid. The severity of the crisis facing the Industry is unprecedented. CMAI once again appeals to the Government to save the MSME Industry. Immediate support on Direct Wage Transfer or Mandatory disbursement of Working Capital Loan is required on an SOS basis.

31 per cent of domestic apparel factories may close down: Around 31 per cent of the domestic apparel factories are likely to close down. With the extended lock-down and loss of sales during the peak consumption (festive) period, the grim reality is becoming more obvious, MSME businesses are seeing no future and are wanting to shut operations. Considering that close to 8 million people are employed by the domestic apparel industry, almost 25 lakh workers will be out of job. The job losses in the textile value chain will compound further and almost 1 crore job may be lost in the textile value chain.

CMAI’s appeal to the Government is to provide:

Wage Subsidy: CMAI has appealed for a 50 per cent sage subsidy up to Rs. 5,000/- per month for 5 months from March 2020 to July 2020 PF & ESIC contribution of employer and employee should be done by Government for 3 months for employee drawing wage not more than Rs. 15,000 with no cap on number of employees in the company.

2. Interest Subvention: All banks to offer interest subvention of 5 per cent on total borrowings.

3. Working Capital: 25 per cent additional working capital to be made available on a mandatory basis subject to available drawing power on revised norms.

4. Moratorium: While RBI has already allowed 3 months moratorium on terms loans and working capital loans, considering the long working capital cycle, this needs to be extended to 6 months. Further, Purchase Bills Discounting and Letter of Credits dues must also be given the 90 days Moratorium.

5. SEBI: Must be instructed to provide relaxation in rules for Capital Raising for Listed companies. due to the sudden fall in stock prices. Further, SEBI must also provide a 90 days moratorium on listed debt instruments which are used for financing working capital and term loans.

6. Electricity: Waiver of minimum demand load charges for 4 months from March 2020 to June 2020. State government to waive electricity duties for 4 months.

7. GST: Allow additional 90 days for depositing of GST Dues for March and 30 days for GST for May & June 2020.

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