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CIBIL-style score, green fund in works to meet textile sector's credit needs

CIBIL-style score, green fund in works to meet textile sector's credit needs

Time of India18-07-2025
The government is considering establishing a credit rating system and a common green fund to address the credit access issues of the textile sector, especially smaller units, and help meet its financing needs for sustainable production. The textiles ministry has sought suggestions from industry on ways to grade the performance of enterprises in the sector and assess their creditworthiness, officials said.
"Banks are overcautious in extending credit to the textile sector and a CIBIL score kind of a protocol will help them understand the sector's requirements," said an official, who did not wish to be identified. The CIBIL score, compiled by Credit Information Bureau (India) Limited, is a credit score that reflects an individual's creditworthiness, with a higher score indicating lower risk for lenders.
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Such a protocol in the textile sector would take into account issues such as long payment cycles and job work requirements of the industry.
ET Bureau
Though there are separate funds for various financing needs for sustainable production such as for energy efficiency and water management, a combined green fund would make it procedurally easier for the units to access credit and attract investments, the official said.
The measure is crucial as India is aiming at a threefold increase in textile exports to ₹9 lakh crore by 2030. India's textile sector expanded 7% last year, making the country the world's sixth largest textile exporter.
"The recognition that textiles is a high impact sector and their credit needs are a challenge, is an important initiative. We are looking at ways to ensure that the working capital needs of the
textile industry
are met," said Chandrima Chatterjee, secretary general, Confederation of Indian Textile Industry.
The ministry has also asked industry about the issues it faces in accessing the Credit Guarantee Fund Trust for Micro and Small Enterprises and suggested monitoring of the disbursements under the fund to understand the utilisation and make it more efficient for the textile industry.
"Discussions are also ongoing over whether credit facilitation centres can be set up in textile clusters. All these are being discussed to improve the credit risk perception of the sector," the official added.
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