The value of coming together on a common platform was recently brought home to small and medium garment manufacturers in Ludhiana, who say they have been paid most of their dues by customers who were earlier withholding payments or delaying them.
This happened only after the garment makers formed the MSME Garment Manufacturers Association of Ludhiana, or MGMAL, to pursue their cause.
Ajit Lakra, a member of the core committee of MGMAL, says some of the payments due from retailers have been realised. For the remainder, the garment makers have taken legal recourse against buyers.
The association, with over 50 members, was formed in 2010 after the garment manufacturers – most of them in the small and medium category – decided that putting up a united front would be the most effective way to force buyers (big retail chains) who were deferring payments beyond what is allowed under the provisions of the MSME Development Act, 2006.
“According to Chapter V, Section 15 of the MSME Development Act 2006, retail chains are liable to make payments to MSMEs within 45 days of receiving supplies. However, payments were being delayed for periods ranging from 30 to 300 days. The interest payable for the delayed period beyond 45 days under Section 16 of Chapter V was also being denied to MSME units,” said Dinesh Gupta, general secretary of MGMAL.
Earlier, most garment manufacturers in Ludhiana had remained silent in the face of payment delays by customers, both because of intense competition and the fear of losing business.
After the formation of MGMAL in 2010, Gupta said, things had improved slightly. Negotiations are on with two retail chains, as their outstanding exceeds Rs 30 crore. However, now association members are less hesitant to take legal recourse.
Members of the association have got warrants issued against some alleged offenders. Formation of the association had helped to build awareness about MSME rights, and this has been a big positive factor, Lakra said.