CII wants due payments cleared
Banks should provide additional reconstruction term loans to MSMEs impacted by the lockdown-COVID-19, with the Government offering a guarantee of up to 20% of the default.
This is among the Confederation of Indian Industry’s (CII) five suggestions made on 18 May 2020 in response to the economic reforms supporting the Rs.20 lakh crore relief package.
The other four suggestions listed by CII Director General Chandrajit Banerjee are:
The government should monitor payment delays by CPSUs to MSMEs closely through a portal for complaints and ensure necessary funds are provided and utilized for this purpose.
All PSUs and Government Departments, both at the Central and State levels, must be encouraged or mandated to register themselves on Trade Receivables Discounting System (TReDS).
All pending GST refunds should be cleared immediately in addition to overcome the delays in payments to MSMEs due to disputes.
All incentives due to MSMEs under various central and state schemes should be released immediately.
A major boost to the MSME sentiments would be to clear due payments.
While there are several estimates of amounts due to MSMEs from the Government and PSUs, a quick poll by CII showed that about 450 MSMEs reported delayed payments worth Rs.1,819 crores of which Public Sector and Government Departments including State Departments owe MSMEs Rs.1,709 crores. The private sector owes about Rs.110 crores to MSMEs, according to the poll.
The sample CII poll revealed that about 32% of the outstanding to MSMEs have been delayed for more than two years and about Rs.895 crores are stuck in disputes. These need to be resolved soon to save the MSMEs from solvency, Banerjee pointed out.
Out of the total delayed payments amount, manufacturing contracts account for Rs.153 crores, services contracts account for Rs.723 crores and multiple sectors accounted for Rs.930 crores.
Almost Rs.723 crores are delayed payments from services sector areas including EPC contracts (Rs.92 crores), Engineering contracts (Rs.35 crores), IT & ITES (Rs.47 crores) and other services (Rs.113 crores). fiinews.com
