The Tirupur Exporters Association (TEA) requested public sector State Bank India (SBI) to help MSMEs tide over the liquidity crisis, as the knitwear sector is passing through a difficult situation due to an unprecedented surge in cotton prices that have more than doubled.
The subsequent hike in yarn prices has also doubled compared to last year, which ultimately resulted in the Tirupur knitwear garment sector and stakeholder working units going into confusion and seeking support from the government as well as the banks to pull them out of the crisis, TEA President Raja M Shanmugham said in a letter to SBI Chairman Dinesh Kumar Khara.
Thanking the bank for continuously providing support to the Tirupur knitwear sector, comprising 95 per cent of MSMEs, Shanmugham said 18 months back, the unit could buy one kg of yarn for Rs 200 whereas now the same amount fetches only 400 grams of yarn.
This revealed how the knitwear exporting MSMEs are now undergoing financial stress on the operational front and the major concern is that liquidity has been drained off from its sanctioned limits, he said.
Despite all of this, it is possible for MSMEs to execute only 40 per cent of their own capacity, Shanmugham said. “We would like to drive home the point that price escalation cannot be easily equated with price realisation as it takes time and ultimately all MSMEs are facing stress,” he pointed out.
“Tirupur knitwear exports clocked Rs 33,525 crore in 2021-2022 and in terms of dollars, recorded USD 4.51 billion, 1.07 per cent of All India Merchandise Exports. Despite passing through a host of adverse issues, with our in-built resilient nature, we have been confidently moving ahead in the challenging global and domestic business environment,” he said.