The financial stress faced by the industry in meeting operational expenses, particularly during the COVID-19 period, was effectively addressed by the Government through the introduction of the ECLGS in 2020, aimed at providing immediate liquidity support to MSMEs and business enterprises to meet their operational liabilities.
Subsequently, reflecting the resilience of the industry as evidenced by improvements in PMI and export performance, the second version of the scheme was introduced to extend support to stressed sectors, including the textile sector, with enhanced eligibility and a credit cap of up to Rs.500 crores.
The prevailing geopolitical situation, particularly the Middle East crisis, has significantly impacted the textile sector. The industry remains dependent on the region for key raw materials used in the man-made fibre segment, while exports of value-added products to global markets have been adversely affected. This is primarily due to the abnormal increase in logistics costs and a shift in consumer spending behaviour, with a growing preference for lower-cost products.
With initiatives focused on export risk mitigation, logistics and trade facilitation, and the creation of new and strategic international markets through the conclusion of FTAs, these measures are aimed at stabilizing operations, safeguarding exports, and maintaining global competitiveness despite ongoing geopolitical disruptions.
The major hindrance faced by the industry has been the lack of adequate working capital to sustain manufacturing capacity, retain the workforce, procure essential inputs, and service existing bank loans.
In a press release issued today, SIMA Chairman Mr. Durai Palanisamy has profusely thanked Hon’ble Prime Minister Shri Narendra Modiji, Hon’ble Minister for Finance, Hon’ble Minister for Commerce & Industry and Hon’ble Minister for Textiles, Government of India for introduction of ECLGS 5.0. Timely and much-needed initiative that has significantly benefited the industry by providing additional liquidity support to businesses impacted by recent global disruptions, particularly the West Asia crisis.
Mr Durai has highlighted that the scheme extends support to both MSME and non-MSME sectors, with a tenure of up to five years and availability for loan sanction up to 31st March 2027, along with a moratorium of one year on principal repayment. The scheme provides additional credit of up to 20% of the peak working capital as of Q4 FY26, subject to a maximum cap of Rs.100 crore per borrower. Importantly, the facility is fully collateral-free and carries no guarantee fee, making it highly accessible and beneficial for the industry.
SIMA Chief has pointed out that the textile industry believes that ECLGS 5.0 will play a vital role in stabilizing production, protecting employment, and sustaining the sector’s contribution to exports and economic growth, particularly at a time when raw cotton prices are witnessing abnormal and frequent increases.
SIMA Chairman emphasized that the ECLGS scheme, coupled with the TEEM scheme and the Mission for Cotton Productivity with an outlay of Rs.5659.22 crores approved by the Cabinet in the recent Union Budget, will provide a strong impetus to the growth of the industry and enhance its competitiveness in both global and domestic markets.
