Credit Access Issues in the Textile Sector

The government is exploring the establishment of a credit rating system and a common green fund to address credit access and financing needs in the textile sector, particularly for smaller units.

Objectives

• To facilitate sustainable production by addressing the creditworthiness of enterprises.
• To create a credit protocol similar to the CIBIL score for better understanding by banks.
• To simplify access to funds by combining existing separate funds for sustainable production.

Details and Challenges

• Banks exhibit caution in extending credit due to a lack of understanding of the textile sector's requirements.
• The CIBIL score serves as a model for assessing creditworthiness, where a higher score indicates lower risk.
• Long payment cycles and job work requirements are specific challenges faced by the textile industry.

Industry Impact and Goals

• India aims to increase textile exports to ₹9 lakh crore by 2030, requiring significant financial support.
• The sector witnessed a 7% expansion last year, establishing India as the world's sixth-largest textile exporter.

Stakeholder Involvement

• The Confederation of Indian Textile Industry acknowledges the need for addressing credit challenges.
• Consultations with the industry aim to enhance the Credit Guarantee Fund Trust for Micro and Small Enterprises.
• Monitoring the disbursement of funds to improve efficiency in meeting working capital needs.
• Discussions on establishing credit facilitation centres in textile clusters to enhance credit risk perception.