Tirupur exporters urge govt to insulate MSMEs from Basel III norms, give incentive inline with MEIS

Chennai, Aug 8 (KNN) Tirupur Exporters’ Association (TEA) has urged the Central Government to insulate Micro, Small and Medium Enterprises (MSMEs) from Basel III norms.

The association has also requested the government not to insist on credit rating before getting loans under Basel III norms.

During a meeting with Finance Minister Nirmala Sitharaman and MSME Minister Nitin Gadkari, TEA President Raja M Shanmugham said the requirement of credit rating as per BASEL III norms before getting loans from banks was not necessary as the rating does not reflect the true nature of the whole knitwear garment sector or the real performance of the units.

Also, he referred to the repercussions in the employment side and repayment of loans to banks if the issues were not immediately resolved.

Every bank already has its own rating mechanisms which are much more robust than the rudimentary process being followed by these MNC rating agencies, he said.

It is high time that at least the MSME segment is totally exempted from external rating requirement and replaced by either the bank’s internal rating or create a parameter based automatic rating module through any agency under supervision of Reserve Bank of India (RBI), he pointed out.

NPA classification norms should be brought back to 180 days instead of 90 days prevailing now while evaluating the unit; restructuring two times to have a leverage after considering the sessional nature of the business are panacea to cure the illness of MSMEs, Shanmugham said.

He pointed that the Merchandise Exports from India Scheme (MEIS), a lifeline support given to exports including readymade garments, has been removed from August 1, 2019 onwards due to more pressure coming from WTO, further to a complaint lodged by the US with WTO dispute settlement body.

Hence, the concerned ministry  should make an alternative arrangement in place of MEIS to enhance the competitiveness of beleaguered knitwear garment exporting MSMEs in Tirupur and sustain in the global market.