In a bold move to tackle a deepening payment crisis, textile traders in Surat have decided to publicly shame distributors who fail to clear their dues. The Federation of Surat Textile Traders Associations (FOSTTA) Forum announced this stringent measure on Friday, aiming to protect its members from heavy financial losses.
Public Shaming as a Tool for Ethical Trade
The decision was taken during a forum meeting in response to a growing number of complaints from traders. These complaints stem from a widespread market slowdown and a troubling pattern of payment defaults. The core of the new policy is to upload the details of distributors with outstanding payments beyond the agreed 180-day credit period onto the FOSTTA Forum mobile application.
Forum members have collectively agreed to first list their own pending payments on the app. Following verification, the names of the defaulting distributors will be circulated among all members through the app and official mobile groups. "This is about creating psychological pressure for timely payments and promoting ethical trade practices," a forum representative stated.
The Problem of Returned Goods and Trader Losses
The issue is particularly acute with the common industry practice of a 180-day credit period. Traders report that distributors from across India often place orders on this basis. However, when payment is demanded after the credit term expires, many distributors opt to return unsold goods instead of paying.
Kailash Hakim of the FOSTTA Forum highlighted the severe impact of this practice. "After six months, returned goods are often out of fashion or damaged, leading to heavy losses for traders," he explained. This leaves the traders with obsolete stock and significant financial holes, exacerbating the challenges of the current market slowdown.
Proposing Stricter Credit and Return Windows
Beyond the naming-and-shaming initiative, the forum meeting also discussed proactive measures to prevent such situations in the future. Key proposals included restricting the maximum payment credit period to just 70 days and limiting the time allowed for returning goods to 30 days.
These proposed changes aim to create a more sustainable and fair trading environment. By shortening credit windows and return periods, the forum hopes to reduce the risk for traders and encourage more responsible ordering and inventory management from distributors. The move by FOSTTA signals a collective stand by Surat's powerful textile trading community to safeguard their businesses and instill greater accountability in the supply chain.
