Get full access to one story every week, and to summaries of all other stories. Just create a free account

Tirupur, in India’s southern state of Tamil Nadu, is an export hub for textiles. Each year, the town’s medium, small, and micro enterprises (MSMEs) export products worth $3.5 billion, servicing international brands such as Zara, Disney, Nike, and Puma. This year is different. Even as factories continue to churn out clothing, the town is waiting anxiously for demand from exporters to return.

Thirty-two-year-old Gomatha International, which employs nearly 400 people, is among the companies watching the clock tick away. The company, which exports baby and kids wear to countries like Australia, Finland, and Sweden, saw business grind to a halt in March, when India went into lockdown to stave off the threat of Covid-19. CMN Muruganandan, the company’s owner, says he is only just seeing a gradual uptick. But even as business as usual slowly resumes, the terms of doing business have changed.

For Muruganandan, borrowing has always been integral to operations. While he needs to make payments on a weekly or fortnightly basis, actual sales now only happen every three months. This situation has worsened for Muruganandan, who is a member of the Tirupur Exporters Association (TEA). Payments from clients, which once took between 60-90 days, now take up to four months, increasing his reliance on borrowing. Muruganandan already has borrowings worth Rs 8 crore ($1 million)—a debt he can settle only when business is back to pre-Covid levels, but for which he needs to continue repayments.

Gomatha’s fellow MSMEs—over 60 million of them—are in the same boat. These businesses earn anywhere between a few crore to Rs 250 crore ($33.7 million) annually. For many of them, their fate will be determined by a case that’s set to go before India’s Supreme Court (SC) on 28 September.

The SC is in the middle of hearing a public interest litigation by aggrieved individual borrowers and various company associations, including TEA, all of whom opted for the government’s six-month loan repayment moratorium moratorium moratorium Temporary suspension in repayment of loan . Their primary appeal to the court is to suspend the compounding of interest—interest charged on interest—for the moratorium period.

Strength in numbers

While the PIL originally represented individual borrowers, companies soon flocked to join in. The PIL has nearly 30 petitioners, said Kumar Dushyant Singh, the SC lawyer who filed the case

“The SC is inclined to do away with the interest on interest. Otherwise they would have dismissed it by now,” said a lawyer who is looking to add another petition to the PIL.

For many of the aggrieved businesses, the PIL is a chance to not just seek suspension of interest, but to stop their credit ratings from getting downgraded.

Any company that has over Rs 5 crore ($675,683) in borrowings is mandated by the Reserve Bank of India (RBI) to get its loans rated by regulated external Credit Ratings Agencies (CRAs) like Crisil, Care, and ICRA.

AUTHOR

Arundhati Ramanathan

Arundhati is interested in how people use money in the digital age and how new economies will take shape based on that interaction. She writes the newsletter Ka-Ching! every Thursday. She lives in Bengaluru and has spent 14 years reporting and writing on various subjects.

View Full Profile

Subscribe to read this story

The Ken is the only business subscription you need. Questions?

 

Premium

  • 5 original and reported longform business stories every week
  • Access to ONLY India edition
  • Close to 250 exclusive stories every year
  • Full access to over 6 years of paywalled stories
  • Pick up to 5 premium subscriber newsletters
  • 4 original and reported longform business stories each week
  • Access to ONLY Southeast Asia edition
  • Close to 200 exclusive stories every year
  • Full access to all paywalled stories since March 2020
  • Pick up to 5 premium subscriber newsletters

Rs. 2,750 /year

$ 120 /year

India Edition
Subscribe Subscribe
Most Asked For

Borderless

  • 8 original and reported longform business stories each week
  • Access to both India and Southeast Asia editions
  • Close to 400 exclusive stories every year
  • Full access to over 6 years of paywalled stories across India and Southeast Asia
  • Unlimited access to all premium subscriber newsletters
  • Visual Stories

Rs. 4,200 /year

Subscribe
 

Echelon

  • 8 original and reported longform business stories each week
  • Access to both India and Southeast Asia editions
  • Close to 400 exclusive stories every year
  • Full access to over 6 years of paywalled stories across India and Southeast Asia
  • Unlimited access to all premium subscriber newsletters
  • Visual Stories
  • Bonus annual gift subscription
  • Priority access to all new products and features

Rs. 8,474 /year

Subscribe
Or

Questions?

What kind of subscription plans do you offer?

We have three types of subscriptions
- Premium which gives you access to either the India or the Southeast Asia edition.
- Borderless which gives you complete access to The Ken across both editions
- Echelon which gives you complete access to The Ken across both editions along with a bonus gift subscription

What do I get if I subscribe?

The Premium edition gives you access to stories in that edition along with any five subscriber-only newsletters of your choice.

The Borderless and Echelon subscription gives you complete access to The Ken across editions and unlimited access to as many newsletters as you like.

What topics do you usually write about?

We publish sharp, original and reported stories on technology, business and healthcare. Our stories are forward-looking, analytical and directional — supported by data, visualisations and infographics. We use language and narrative that is accessible to even lay readers. And we optimise for quality over quantity, every single time.

Our specialised subscriber-only newsletters are written by our expert, award-winning journalists and cover a range of topics across finance, retail, clean energy, cryptocurrency, ed-tech and many more.

How many newsletters do you have?

We are constantly adding specialised subscriber-only newsletters all the time. All of these are written by our team of award-winning journalists on a specialised topic.

You can see the list of newsletters that we publish over here.

Does a Premium subscription to your Indian edition get me access to the Southeast Asia edition? Or vice-versa?

Afraid not. Each edition is separate with its own subscription plan. The India edition publishes stories focused on India. The Southeast Asia edition is focused on Southeast Asia. We may occasionally cross-publish stories from one edition to the other.

We recommend the Borderless or the Echelon Plan which will give you access to stories across both editions.

Do you have a mobile app?

Yes! We have a top-rated mobile app on both iOS and Android which allows you to read on-the-go and has some amazing features like the ability to bookmark stories, save on your device, dark mode, and much more. It’s really the best way to read The Ken.

Is there a free trial?

You can sign up for a free account to experience The Ken and understand our products better. We’ll send you some free stories and newsletters occasionally, and you can access our archive of previously published free stories. You can stay on the free account as long as you’d like.

The vast majority of our stories, articles and newsletters can be accessed only by a paid subscription.

Do you offer any discounts?

Sorry, no. Our journalism is funded completely by our subscribers. We believe that quality journalism comes at a price, and readers trust and pay us so that we can remain independent.

Do you offer refunds?

No. We allow you to sample our journalism for free before signing up, and after you do, we stand by its quality. But we do not offer refunds.

I am facing some trouble purchasing a subscription. What can I do?

Just write to us at [email protected] with details. We’ll help you out.

I have a few more questions. How can I reach out to you?

Sure. Just email us at [email protected] or follow us on Twitter.