The implementation of the 45-day MSME payment rule is proving to be a double-edged sword for Surat’s textile mills. While designed to ensure timely payments, the rule has inadvertently placed significant financial pressure on traders and mills.
Delayed Production Cycles: Textile traders are struggling to complete the full supply chain—from purchasing grey fabric to processing it in mills and selling the textiles—within the 45-day payment window. This is resulting in a slowdown in production, with mills observing two weekly holidays to cope with reduced job work orders.
Financial Strain: Traders face a significant financial burden as they are required to pay for grey fabric and processing without the certainty of receiving payments within the set timeframe. This has led to a decline in new purchases and job work orders, particularly in the last two months of the financial year.
Impact on Seasonal Business: The timing of the rule is concerning, especially with Ramadan Eid approaching. Traders are holding back on new orders, fearing cash flow issues, which could affect seasonal demand during the festive period.
The situation underscores the need for a sector-specific solution or flexibility in the 45-day rule, allowing textile traders and mills to maintain financial stability while ensuring compliance with the MSME Act.
