The minister’s meeting was part of a series of such sessions lined up with representatives of various sectors till August 11
Lack of credit disbursal by banks even after sanctions and long delays in settlement of dues by the government departments and PSUs have undermined the MSMEs’ ability to sustain their business cycles, liquidity-starved micro, small and medium enterprises (MSMEs) told finance minister Nirmala Sitharaman on Tuesday.
The minister’s meeting with MSME representatives was part of a series of such sessions lined up by her with important stakeholders up to August 11 to devise plans for critical sectors amid fears that the economy might be slipping into a protracted slowdown.
The minister promised to study the issue of delay in release of dues by the government departments and promised remedial steps to alleviate the difficulties of MSMEs.
“As against sanctioned, only 10% is being disbursed by banks under 59-minute scheme,” said Ashok Saigal, co-chair of CII MSME Committee. Under the scheme, MSMEs registered under the GST are eligible for loan up to `1 crore in just 59 minutes through ‘psbloansin59minutes.com’ portal. The MSMEs also complained that despite 70% guarantee from the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), the firms have not been able to secure loans from banks in many cases.
Another demand was to revise the the turnover/investment-related definition of MSMEs upwards. The definitions were brought in 2006 and have since become dated due to inflation. “Currently a firm with `5 crore investment is classified as ‘small’ while investment over `5 crore are ‘medium’. But machine that cost `5 lakh in 2006 is not valued at `15 lakh,” said Rajive Chawla,Integrated Association of Micro, Small and Medium Enterprises of India (I am SME of India). Sitharaman was positive and she would look into the issue.
The minister asked all the industry bodies to give in writing their suggestions for the sector in 3-4 days to prepare an action plan for the MSME sector.
Other issues raised by MSMEs included a demand to exempt from capital gains tax for the sector if gains are reinvested in business. Among others, they sought rationalisation of penalty for late filing on MCA as it is same for large and small companies. They also raised the issue of VAT refunds not being transferred to GST regime by states.
MSMEs are the backbone of the Indian economy, contributing nearly 30% of the gross domestic product and 49% of country’s exports. MSMEs are also the largest employers, next only to agriculture. Over six crore such units provided employment to about 11 crore people (NSSO, 2016).