Ahead of the first full budget of the Modi 3.0 government on July 23, MSME body FISME has suggested measures to address the delayed payment issue faced by MSMEs

Ahead of the first full budget of the Modi 3.0 government on July 23, MSME body FISME has suggested measures to address the delayed payment issue faced by MSMEs

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Jul 08, 2024

Mohammed Ramees

In a presentation to Finance Minister Nirmala Sitharaman recently on budget expectations, FISME called for a ‘Payment Act’ to instil discipline in commercial practices

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It suggested a ‘Payment Act’ to instill transparency in procurement in public and private domains, reduce litigation and improve cash flow of businesses

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“We have noted that ‘Payment’ is not the ‘essence’ in the Indian Contracts Act which is based on the English law,” said FISME

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As per FISME, the UK now has ‘The Late Payment of Commercial Debts Act (UK)’ which now requires timely payment for commercial transactions and imposes interest on late payments

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Similarly, in India the issue has to be taken up in larger context away from the confines of MSEs by bringing in Payments Act, said FISME

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It also asked for allowing use of insurance surety in lieu of bank guarantees based on announcement in 2022 budget

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To streamline packing credit for MSME exporters, FISME said letter of credit banks from developed nations must be considered sufficient security for MSME credit

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FISME said streamlining the packing credit process for export-oriented MSMEs will enhance their ability to fulfill export orders

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