Fashion
SIMA hails India’s ECLGS 5.0 support amid West Asia crisis
The revised scheme has been introduced at a time when the textile sector is facing rising operational and financial pressure due to disruptions linked to the West Asia crisis. Reflecting the resilience shown by the industry through improved PMI trends and export performance, the government has expanded the scheme with enhanced eligibility norms and a credit cap of up to ₹5000 million ($52.55 million) for stressed sectors.
The Southern India Mills’ Association (SIMA) welcomed the Government of India’s ECLGS 5.0 scheme, calling it a timely liquidity support measure for the textile industry amid the ongoing West Asia crisis.
The scheme offers collateral-free loans, extended repayment tenure, and enhanced credit support to help textile firms manage rising raw material costs, logistics disruptions, and financial stress.
According to industry sources, the textile sector has been significantly impacted by the prevailing geopolitical tensions, particularly because the man-made fibre segment remains dependent on the Middle East region for critical raw materials. At the same time, exports of value-added textile products have come under pressure due to abnormally high logistics costs and changing global consumption patterns, with buyers increasingly shifting towards lower-cost products.
The government had earlier launched ECLGS in 2020 during the COVID-19 crisis to provide immediate liquidity support to MSMEs and business enterprises facing operational stress. The scheme played a key role in helping companies meet operational liabilities and sustain manufacturing activities during the pandemic period. SIMA noted that ECLGS 5.0 extends similar support at a time when global geopolitical disruptions are again straining industrial operations.
In a press release, SIMA Chairman Durai Palanisamy expressed gratitude to Prime Minister Narendra Modi and the government for introducing the enhanced scheme. He said ECLGS 5.0 would provide critical liquidity support to businesses affected by the ongoing West Asia crisis and help the industry manage financial stress more effectively.
According to SIMA, the scheme covers both MSME and non-MSME sectors and offers loans with a repayment tenure of up to five years. Loan sanctions under the scheme will remain available until March 31, 2027, while borrowers will also benefit from a one-year moratorium on principal repayment.
The association highlighted that the scheme enables additional credit support of up to 20 per cent of the peak working capital as of the last quarter of the recently concluded fiscal 2025-26, subject to a maximum limit of ₹100 crore per borrower. The facility is fully collateral-free and does not carry any guarantee fee, making it highly accessible and beneficial for the textile industry.
Palanisamy pointed out that inadequate working capital has emerged as one of the biggest challenges for textile manufacturers, affecting their ability to maintain production capacity, retain workers, procure essential raw materials, and service existing bank loans. He further stated that ECLGS 5.0 would play a crucial role in stabilising production, safeguarding employment, and sustaining the textile industry’s contribution to exports and economic growth, especially at a time when raw cotton prices are witnessing abnormal and frequent fluctuations.
SIMA also emphasised that ECLGS 5.0, along with the TEEM scheme and the Mission for Cotton Productivity approved in the recent Union Budget with an outlay of ₹5,659.22 crore, would provide a strong boost to the long-term growth and competitiveness of the Indian textile industry in both domestic and international markets.
The association added that government initiatives related to export risk mitigation, logistics and trade facilitation, and the creation of new strategic markets through free trade agreements (FTAs) would help the textile sector maintain stability and competitiveness despite continuing geopolitical disruptions.
Fibre2Fashion News Desk (KUL)