Delayed MSME payments: Nitin Gadkari says not enough complaints filed, need more filings to take action

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Published: September 5, 2019 7:50 PM

According to the MSME Samadhaan portal, 24,486 applications have been filed by MSEs involving Rs 6,274.66 crores out of which 1,420 applications are disposed of by the Micro and Small Enterprise Facilitation Council (MSEFC) while 3,995 applications have been rejected.

According to the minister, there is not sufficient data (cases) against wilful defaulters on MSME Samadhaan.

MSME minister Nitin Gadkari on Thursday urged small businesses to file their complaints on the MSME Samadhaan portal with respect to delayed payments, particularly from the government undertakings, state governments etc., in order to take this up with cabinet secretary, state governments and other respective departments. MSME Samadhaan was launched in October 2017 for filing applications against the buyer before the concerned MSE Facilitation Council of the MSME’s respective state. However, there is no central authority to take action on behalf of MSMEs against their buyers for failing to pay dues in time.

According to the minister, there is not sufficient data (cases) against wilful defaulters and that “the number (of cases) filed is very less. I would urge all who are part of the MSME sector to register whatever their concerns are at the portal. Government undertaking, government departments, state governments also don’t pay to MSMEs. For me to tell this to cabinet secretary or write to all of them, we should have a record (of cases),” Nitin Gadkari said at a workshop organised by the MSME Ministry with respect to delayed payments issue. The minister added that if it still doesn’t solve the payment issue then “action as per the legal provisions will be taken but their data should be collected first,” he added.

According to the MSME Samadhaan portal, 24,486 applications have been filed by MSEs involving Rs 6,274.66 crores out of which 1,420 applications are disposed of by the Micro and Small Enterprise Facilitation Council (MSEFC) while 3,995 applications have been rejected.

Also read: MSME boost: Edelweiss partners with SBI to offer low cost credit up to this much amount

The comments from the minister assume significance as a lack of working capital due to delay in payments made to MSMEs by public and private enterprises has been choking their survival. Suggesting alternate routes for capital infusion the minister said that MSMEs should explore listing themselves on stock exchanges. “20 micro and small businesses have been registered on the National Stock Exchange and they will be raising money from capital markets. Some of our MSMEs have a good amount of profits,” Nitin Gadkari said adding that “I would also request MSMEs to list on National Stock Exchange and raise money via capital markets. There is no better way to go big.”

The workshop was attended by entrepreneurs, industry associations etc. The proposal of having more than one MSEFC in each state was also discussed. It was agreed among the minister and secretary that “there are many states which are having more than one facilitation council and so all states should adopt this model and have more facilitation council so that people can have better access to them,” Anil Bhardwaj, Secretary-General, FISME told Financial Express Online.

The meeting also had a consensus with respect to the issue pertaining to Insolvency and Bankruptcy Code to consider MSMEs equal to financial creditors to ensure their dues are secured during the liquidation event. “We had consensus on earmarking 5-10 per cent to secure dues of MSMEs with regards to cases involving insolvency and bankruptcy of corporates. In such situations financial creditors who are secured lenders get the money first while the rest is given to operational creditors even as it never reaches them. A snowball effect of this gets on to  MSMEs,” said Bhardwaj.

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