Orders down by 70 per cent, Erode textile wholesalers worried

March 11, 2024

Category: General

Country: India

Region: South Asia

"Only 30 per cent of the orders have come in January and February because many of our customers are unable to repay the debts within 45 days."

By P Srinivasan
Updated on: 10th March 2024, 11:56 am
2 min read

ERODE: Wholesale textile traders in Erode are worried that orders for the ready-made textiles have dropped by 70 per cent in the last two months.

They blame the central government’s amendment in the Income Tax Ac, 1961, where customers will have to repay the amount within 45 days.

P Ravichandran, a textile trader and the secretary of the Federation of All-Trade and Industry Association, said, “The Centre amended Section 43B (h) of the Income Tax Act, 1961, to facilitate quick business debts by small and micro enterprises. Though the amendment was brought last year, it will come into effect from March 31. The amendment stated that if a trader obtains goods or credit from small and micro enterprises or MSME registrants, the amount must be repaid within 45 days. Otherwise, it will be treated as his income and they will have to pay 30 per cent of the income tax on it. This has created a major issue in the ready-made textile trade.”

He added, “As far as Erode is concerned, the ready-made textile market is a big one. There are about 5,000 traders here excluding the Gani textile market traders. All of them buy fabric and manufacture it into ready-made textiles. An average of Rs 500 crore is being traded every month. Annually, trade of up to Rs 6,000 crore is done here. Orders come from other districts and states like Kerala, Andhra Pradesh, Karnataka, Bihar, Assam, etc. However, business has not been smooth for the past two months. Only 30 per cent of the orders have come in January and February because many of our customers are unable to repay the debts within 45 days. They are starting to look for ready-made textile traders who will give them extra time.”

He further said, “Because this amendment has been brought only for small and micro industry, enterprises with turnover comes below Rs 50 crore. So customers looking for medium enterprises that have a higher turnover of the limit. This amendment is meant to crush small and micro industries like ours. This should be brought to all levels of industry. Otherwise, this amendment should be postponed for one year.”

SVS Sankar, a textile wholesaler of Erode, said, “We have also reduced purchasing fabrics as orders have come down. I have ordered only 20 per cent of the fabric in the last two months. We are currently only selling shirts, pants, sarees, salwar suits, and nighties, on hand. Our customers are unable to pay us within 45 days. If this continues, our customers will be taken away by big corporate companies. Hence, the central government should change the limit from 45 days to 100 days. Or else it should be postponed for a year.

Speaking to TNIE, A Ganeshamurthi, Erode MP said, “The request of the members from the Erode textile industry has been brought to the central government’s attention.

Courtesy: NewIndianExpress.com