Credit and finance for MSMEs: The Department of Expenditure (DEA) has tasked the public procurement portal Government e-Marketplace (GeM) to implement the government’s budget announcement for refunding 95 per cent of the penalty amount to MSMEs for the latter’s failure to execute contracts during Covid under Vivad Se Vishwas I scheme for MSMEs.

According to an office memorandum issued by DEA earlier this month, all contractors or suppliers registered as an MSME as on March 31, 2022, will be eligible to register on the GeM portal to claim 95 per cent of the performance security or bid security or liquidated damages forfeited from them in government tenders which had original delivery or completion period between February 19, 2020 and March 31, 2022. 

Also read: Budget 2023: 95% of penalty amount on MSMEs for failure to execute contracts during Covid to be returned

MSMEs will have to provide details including contract number, contracting authority, paying authority and the deducted or forfeited amount on the portal pertaining to the contract applicable with the respective procuring entity. GeM will intimate nodal officers of the procuring entity about the refund claimed and after due diligence initiate the refund. The portal will also provide reports to track pending refunds. The launch of the scheme will be notified by DEA. 

“We are in the process of developing the functionality and trying to roll it out by the end of March,” Prashant Kumar Singh, Chief Executive Officer, GeM told FE Aspire.

Comments from DEA weren’t immediately available for this story.

MSMEs having contracts with “any ministry, department, attached or subordinate office, autonomous body, central public sector enterprises, public sector financial institutions etc.,” will be eligible for relief, the order read.

Also read: 1.44 lakh women entrepreneurs have fulfilled 14.76 lakh orders on GeM since 2019: Govt

Importantly, finance minister Nirmala Sitharaman had also announced a one-time settlement scheme Vivad se Vishwas II in her budget speech to settle contractual disputes of government and government undertakings. Earlier this month, the finance ministry also shared the scheme’s draft. “The old disputes and litigation are not only holding back fresh investment but are also reducing the ease of doing business with the government,” the ministry had said in a statement.

The government has roped in the GeM portal to implement this scheme as well wherein the contractors in dispute with autonomous government bodies, banks and financial institutions, CPSEs, etc., will be offered 60 per cent or 80 per cent of the amount awarded by the court or arbitral tribunal in cases where the order has been passed.

The 2nd edition of FE Aspire’s SMExports Summit is here. Register now to book your seats!