The Reserve Bank of India’s recent trade relief measures should be extended to the entire value chain and not limited to exporters of finished goods, according to a senior official of the textile industry body Texprocil. The demand comes amid raw material suppliers facing shrinking orders as steep US tariffs weigh on India’s export demand.
Siddhartha Rajagopal, Executive Director of the Cotton Textiles Export Promotion Council, said the textile sector must be viewed as an integrated chain where yarn, fabric and garment exporters are interconnected. “There is no point in giving relief only to finished goods exporters affected due to US tariffs. Yarn and fabric manufacturers supplying to these exporters are equally impacted,” he said.
The RBI recently unveiled a set of trade relief measures, including a moratorium or deferment on term loan repayments and interest on working capital falling due between September 1 and December 31, 2025. It also extended the maximum credit period for pre-shipment and post-shipment export credit to 450 days for loans disbursed till March 31, 2026. However, no corresponding relief has been offered to raw material suppliers.
Rajagopal said falling demand for garments creates a domino effect across the textile value chain, hitting fabric and yarn manufacturers as well. He pointed out that delayed payments by exporters in the 20 eligible sectors will be converted into term loans and not counted as NPAs, but suppliers do not receive similar treatment. According to bankers, since the RBI has not issued specific guidelines for suppliers, regular income recognition and provisioning norms will apply, potentially pushing these companies into financial stress.
In contrast, the gem and jewellery sector has welcomed the central bank’s intervention. GJEPC Chairman Kirit Bhansali described the measures as timely, especially as the sector heavily depends on the US market for exports of diamonds and diamond jewellery. He said the extended export credit tenor of 450 days, the increase in the realisation period from 9 to 15 months, and the permission to ship goods against advance payments for up to three years will provide much-needed operational flexibility. Along with the moratorium on term-loan instalments and working-capital interest, the measures are expected to ease liquidity pressures for the capital-intensive industry.
