Coronavirus crisis: Give MSMEs concessional loans, grace period for filing taxes, Assocham tells government

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Published: March 19, 2020 5:17:18 PM

Credit and Finance for MSMEs: Assocham has recommended the government multiple steps, in the light of Coronavirus impact on the trade and economy, to limit the disruption caused to micro, small, and medium enterprises.

coronavirus, coronavirus outbreakParticularly MSMEs, which are exporting goods globally, are facing the heat as their buyers are likely to cancel orders eventually.

Credit and Finance for MSMEs: Industry body Assocham has recommended the government multiple steps, in the light of Coronavirus impact on the trade and economy, to limit the disruption caused to micro, small, and medium enterprises (MSME). In a recommendation report for “National Response to Economic Impact” of the deadly virus, Assocham said concessional working capital loans should be given to MSMEs “ equivalent to one to three month’s (based upon the extent of disruption) average turnover of last year.” Apart from this, another concessional finance “at a rate of 5 per cent for three months through SIDBI,” should be provided to MSMEs.

Particularly MSMEs, which are exporting goods globally, are facing the heat as their buyers are likely to cancel orders eventually. “In a lot of emails, buyers are asking our members to hold back the consignments. Most of the request is emanating from Europe followed by the US and other regions. Since demand has taken a hit, we feel many of these orders may eventually be cancelled,” Ajay Sahai, CEO and DG, FIEO had recently told Financial Express Online. India’s MSME sector, as per the MSME Ministry FY19 annual report, has 6.33 crore MSMEs out of which 99 per cent are micro-enterprises while small and medium-size businesses account for 0.52 per cent and 0.01 per cent shares.

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With concerns raised around business impact, Assocham asked for an extension period for payment of utility, GST and other statutory payments by three months “without impacting their credit history,” it said. Among other key recommendations are launching a framework wherein banks offer flexibility on repayments due to supply delays and relaxing lending norms to help reduce stress on business sentiment as “the pandemic could lead to higher incidence of NPAs,” Assocham said. The industry body also sought tax credit to companies for giving paid sick leave. It asked for a four-week of paid sick leave for MSME employees and ensuring there is no job loss for work from home employees.

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