Delayed payments: Five years since the launch of MSME Samadhaan, the government’s portal to monitor delayed payments to micro and small enterprises (MSEs) from their buyers, 1.64 lakh applications with Rs 39,058 crore stuck in unpaid dues have been filed by micro and small enterprises. Launched on October 30, 2017, the portal has so far facilitated the disposal of 32,628 cases (19.8 per cent of total applications) involving Rs 5,741 crore through MSE Facilitation Councils set up in every state.
According to the data available on the portal, 42,833 applications (26 per cent of total applications) involving Rs 8,200 crore were rejected in five years while 15,287 applications with Rs 1,949 crore were mutually settled between MSEs and their buyers. Moreover, 35,476 cases are currently under consideration by different councils and 38,301 cases are yet to be viewed by the councils.
The data showed that the maximum applications of 39,613 filed by MSEs were against proprietorship firms followed by 13,394 applications against MSMEs buying goods from other micro and small units, 10,005 applications against different state governments, 5,952 applications against central public sector units, 3,286 applications against state public sector units, 2,339 applications against central government departments, 1,200 applications against central ministries, and more during the five-year period.
To address the issue of delayed payments faced by MSMEs, which restricts their access to working capital, the government had taken multiple steps including instructing CPSEs and all companies with a turnover of Rs 500 crore or more to get on-boarded on the Trade Receivables Discounting System (TReDS); mandating companies, which don’t pay within 45 days of purchase of goods, to submit a half-yearly return to the government stating the amount of payments due and the reasons of the delay; allowing buyers deduction under Section 43B of the Income Tax Act for expenditure incurred on payments only when payment is actually made to MSMEs, etc.
Moreover, following the government’s decision in 2020 to levy a 1 per cent penalty on government departments and agencies for delayed payments to vendors selling goods on the public procurement portal GeM, the portal’s CEO PK Singh had said in September that a provision to impose penal interest would be fully operational from the end of September, according to a PTI report. The provision was to deter MSE buyers from delaying payments.