Indore: Readymade garment manufacturing units of Indore saw a decline of more than 40 per cent in orders as against the corresponding period ahead of the peak demand season starting Eid due to the 45-day timely payment obligation for MSMEs.
Payments to MSMEs will be required to be done within 45 days starting the new financial year 2024-25.
Readymade Textile Dealers Association president Ashish Nigam said, “There is a sharp drop in orders. We have a cycle of around 6 months and clearing dues within 3 months will be a difficult task. Retailers have cut down on orders from wholesalers due to the payment terms.”
Readymade garments manufactured in Indore are supplied across the country with Tamil Nadu, Kerala and Andhra Pradesh as major markets sharing over 60 per cent of market share.
Readymade manufacturers said, orders have declined from Madhya Pradesh, Gujarat, Maharashtra and Southern India.
They said, most garment units have reduced manufacturing amid a drop in orders in the peak demand season amid confusion and doubts over the 45 day payment limit.
Festivals are the peak demand season for readymade garments.
Rohan Agrawal, a retailer said, “I have cut down my purchases for the new season because it will be difficult to make the payment within 45 days. The intention of the government behind the 45-days rule is good but implementation will take time. The cycle is such that payment gets cleared in 6-8 months.”
Indore is a hub for ready-made garment manufacturers with presence of more than 1,500 small and medium sized garment manufacturers and festivals are the peak business season for the garment sector.
Experts said, the new rule of payment within 45 days implies only on manufacturers and suppliers and traders are exempted out of it.
