The extension of tenure of loan availed under Emergency Credit Line Guarantee Scheme (ECLGS) has come as a major relief for the textile industry struggling to limp back to normalcy with demand in both the domestic and export market hit badly due to prevailing Covid conditions.
Under ECLGS 1.0, the government extended loan for four years with repayment of only interest in the first 12 months. Later, the principal and interest is repaid in 36 months.
The government has now extended the tenure of this loan to five years. With this, borrowers have to repay only interest in the first 24 months and payback the principal and interest in the following 36 months.
Manoj Patodia, Chairman, the Cotton Textiles Export Promotion Council, said “the increase in the period for repayment of loans to 5 years has come as a huge relief for MSMEs who are struggling hard to get back to business from the disruptions caused by the second wave of Covid pandemic.”
ECLGS assistance
This apart, the government has also extended an additional ECLGS assistance of up to 10 per cent of the outstanding as of February 29, 2020 to borrowers.
This is a positive measure as it will lead to an increase in the much-needed cash flow for MSMEs, he said.
As an additional relief, the government has removed the current ceiling of ₹500 crore on loan outstanding for eligibility under ECLGS 3.0, subject to maximum additional ECLGS assistance of ₹200 crore or 40 per cent of the outstanding, whichever is lower.
Further, the validity of ECLGS extended to 30.09.2021 or till guarantees for ₹3-lakh crore are issued. The removal of the ceiling for eligibility under ECGLS 3.0 and also the extension of the ECGLS will enable more units to take the benefits under the scheme, he added.