The Kerala Textiles and Garments Dealers Welfare Association (KTGA) has issued a critical message to micro and small enterprises/suppliers (manufacturing) in light of recent amendments to the IT Act, specifically the introduction of the new 43 B (h) clause. This clause mandates retailers to make payments within 45 days, significantly affecting the cash flow and operational dynamics of member retailers within KTGA. This article delves into the decisions taken during the executive meeting of KTGA on February 7, 2024, their implications for the textile and garment industry in Kerala, and the broader impacts on the business ecosystem.

Detailed Analysis

The decisions made by the KTGA executive committee highlight a pivotal challenge facing the textile and garment retail sector in Kerala due to the enforcement of the new 43 B (h) clause of the IT Act. The clause’s requirement for retailers to settle payments within 45 days has raised concerns among KTGA members, prompting the association to take several decisive steps:

1. Appeal to Cancel or Modify MSME Registration: KTGA has requested its suppliers to either cancel their online MSME registration or change their category from “manufacturing” to “trading.” This move aims to circumvent the constraints imposed by the new clause, reflecting the urgency with which retailers are addressing the potential financial strain.

2. Reconsideration of Existing Stock and Future Purchases: There is a growing inclination among KTGA members to return goods that cannot be paid for within the stipulated 45-day period. Moreover, there is a conscious move to halt further purchases from micro and small enterprises affected by this clause, signaling a significant shift in procurement strategies.

Message to Micro and Small Enterprise Suppliers (Manufacturing)

3. Concerns Over Government Intervention: KTGA’s message conveys a strong belief that the mutual business relationships, built on trust and honor, should not be arbitrarily disrupted by government mandates. The association recognizes that the amendment was introduced in response to demands from MS suppliers for prompt payment. However, KTGA argues that such legislative changes should not override the established norms of business conduct and cooperation that have long underpinned the sector.

Conclusion

The stance taken by the Kerala Textiles and Garments Dealers Welfare Association reflects a broader concern within the retail industry about the implications of regulatory changes on traditional business models and relationships. The decisions made at the KTGA executive meeting underscore a critical juncture for the textile and garment dealers in Kerala, as they navigate the challenges posed by the new 43 B (h) clause of the IT Act. This situation calls for a balanced approach that considers the financial realities of retailers while striving to maintain the integrity of the supply chain and the welfare of all stakeholders involved. It also highlights the need for ongoing dialogue between the government, industry associations, and MSMEs to ensure that legislative measures support sustainable business practices and promote mutual growth and cooperation.

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Kerala Textiles and Garments Dealers Welfare Association

Message to Micro and Small Enterprises/Suppliers (Manufacturing)

Decisions taken at the executive meeting of KTGA on 07/02/2024

1. Most of our member retailers cannot make payments all of a sudden in 45 days as per new 43 B (h) clause of IT Act.

2. We request you either cancel online MSME registration or change MSME category to “trading” from “manufacturing”, with immediate effect.

3. Our members are on a re-think to return all the goods for which payments cannot be made as per this new provision of Finance Act-2023.

4. Our members are planning to stop further purchases from such MS Enterprises.

5. We realise that this amendment has been introduced due to constant demands of MS suppliers, but we firmly believe that our mutual business relationship based on trust and honour should never be arbitrarily interfered with, by any Government order.

Please understand the gravity of the situation and cooperate.

State General Secretary
Kerala Textiles and Garment Dealers Welfare Association

Message to Micro and Small Enterpries

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