CMAI express concerns over recent amendment to MSMEs payments policy


09 February 2024, Mumbai

The Clothing Manufacturers Association of India (CMAI) has expressed concerns about the recent amendment to the Income Tax Act, which aims to address delayed payments to small and medium enterprises (MSMEs).

While acknowledging the government's efforts, the CMAI argues that the amendment has unintended consequences for the domestic garment industry.


CMAI believes the amendment allows MSMEs to claim a deduction on their income tax for delayed payments received from buyers. It leads to order cancellations from retailers due to the increased financial burden.

To avoid this, CMAI recommends a delayed implementation of the amendment. It advocates for a phased decrease in credit periods over three years, reaching 45 days by 2027.

Nuanced view

The association also recommends excluding payments between MSMEs from the amendment's scope. It urges a general reduction in credit periods to 45 days.

CMAI opines that, while intended to help MSMEs, the amendment creates financial strain for the garment industry. For its effective implementation, the government should make gradual changes and exemptions. It should adopt a shorter credit period to promote transparency and efficiency 

Overall, the CMAI urges the government to consider their recommendations and find a solution that balances the needs of both MSMEs and the garment industry.

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