The Finance Minister, Nirmala Sitharaman will meet the MSME representatives and stakeholders on August 11 to address issues regarding the non-disbursal of loans by banks and delays in settling dues by the PSUs and the government. These issues have prevented the MSMEs’ to sustain their business cycles and, in turn, left them starving for liquidity.
The minister will investigate the reasons behind the delay in releasing the dues by the government and come up with remedies to solve issues of MSMEs.
Under the 59-minute scheme, MSMEs are eligible to get loans up to Rs 1 crore in only 59 minutes via the psbloansin59minutes.com portal. However, the MSMEs must register under GST to avail such loans.
An official from the CII MSME Committee told the Financial Express that the banks disbursed only 10% of the loans under the scheme. Also, the MSMEs complained that firms had not received loans from banks in spite of the 70% guarantee from the Credit Guarantee Fund Trust (CGT) for Micro and Small Enterprises (MSE).
The other demand that micro, small and medium enterprises have is the revision of the turnover or investment-related definitions of these firms upwards. Such definitions were brought in 2006 and become obsolete due to inflation.
Currently, if a firm has invested Rs 5 crore, then it is termed as ‘small’, and a company with more than Rs 5 crore investment is called ‘medium’. Also, a machine that was valued at Rs 5 lakh in 2006 is not valued at Rs 15 lakh now.
The FinMin has requested all MSMEs to pen down their suggestions in three to four days so that an action plan can be prepared.
The MSMEs also demanded an exemption from capital gains tax in case the gains are invested in the business. Additionally, they require a reduction in penalty for late MCA filing and raised an issue of not receiving VAT refunds by the states.
Micro, small and medium enterprises are the backbone of the economy of India. They contribute almost 30% of the domestic product and 49% of India’s exports. These firms also hire the maximum number of employees after agriculture. According to NSSO, 2016, more than six crore units hired about 11 crore individuals.