The ready-made garment manufacturing units in Indore have experienced a decline of over 40 per cent in orders compared to the corresponding period leading up to the peak demand season, which commences with Eid. This downturn is attributed to the 45-day timely payment obligation for Micro, Small, and Medium Enterprises (MSMEs).
Starting the new financial year 2024-25, payments to MSMEs must be settled within 45 days. Ashish Nigam, the president of the Readymade Textile Dealers Association, expressed concern over the situation, noting a significant decrease in orders.
The industry typically operates on a 6-month cycle, making it challenging to clear dues within the stipulated 3-month timeframe. Retailers have curtailed orders from wholesalers due to these stringent payment terms.
Readymade garments produced in Indore are distributed nationwide, with Tamil Nadu, Kerala, and Andhra Pradesh accounting for over 60 per cent of the market share. Manufacturers report a decline in orders from regions including Madhya Pradesh, Gujarat, Maharashtra and Southern India.
Garment units have scaled back production due to reduced orders during the peak demand season. Rohan Agrawal, a retailer, mentioned cutting down on purchases for the upcoming season due to the difficulty in meeting the 45-day payment deadline.
While acknowledging the government’s positive intent behind the rule, Agrawal expressed concerns about the practical implementation, given the industry’s usual payment cycle of 6-8 months.
Indore serves as a hub for ready-made garment manufacturers, housing more than 1,500 small and medium-sized garment producers. Festivals represent the peak business season for the garment sector.
Experts clarify that the 45-day payment rule applies only to manufacturers and suppliers, with traders being exempted from this obligation.
