- To avail the benefits of tomorrow, MSMEs should survive today
- Government to release pending payments to MSMEs to get back in track
- Soft loans should be provided to the MSME's for their revival
“Provide us what we are supposed to get now, and we will give the country 3 times of that, very shortly” states H A Kiran, Director of Federation of Karnataka Chambers of Commerce and Industry, making a strong appeal to the Union and State Governments about the challenges, neglect, MSMEs in India is facing, especially during this current COVID19 lockdown. According to Kiran, the present situation is also a bag full of opportunities to the MSMEs, as countries including Japan, UK, Netherlands, etc, which have several manufacturing bases in China are looking at India as a better option. These factors will boost the economy of India but only if the government supports MSMEs in this difficult situation for basic survival.
H A Kiran, Director & International Trade and Delegation Committee Co-Chairman Federation of Karnataka Chamber of Commerce & Industry (FKCCI), is vocal about the problems faced by the MSMEs. He is also the Vice President of the Hassan District Industrial Association. We spoke to Kiran and brings you the initiatives FKCCI and he as an MSME entrepreneur is initiating, way forward.
“The MSMEs are the backbone of any developing economy, as it contributes about 30% of the GDP and even half of the country’s export comes from this sector”, adds Kiran. Though the outbreak of COVID-19 affected them severely, Kiran states that there is a wide scope for the growth of MSME in the future. As, countries like Japan want their manufacturing units located in China to move to other countries, and India can be a great destination if we are able to pitch the country right.
The Government should come forward to infuse capital into the MSME's who are already in business, at this crucial hour. MSME’s are the major sector of the industry and it represents a very large part of the Indian population, while countries worldwide look at India from a different angle, RBI and GOI should come forward to infuse capital for the betterment of India.
He proposes that, checking the five years performance of an MSME the government should provide them term loans or working capital loans with less charged interests and larger repayment duration. Currently, as the MSMEs are disturbed because of the pandemic, they should be provided with two years of interest-free loans, and after that, the government shall impose guidelines of soft loan on them.“We have been paying GST, income tax continuously for several years and our part of contribution into the taxation and GDP is quite high. In the plight of COVID-19, the government should impose relaxation in GST and IT norms, as there are many MSME's struggling with some GST or IT cases. At least one year the government should not bother them and let them continue their business”, says Kiran.
He states that we have to ensure that all MSME's bounce back and employments are retained. At this point, the complete focus should be given to 'Retention and Growth'. Though, certain measures which have been taken by the government including the announcement of RBI for 3 months moratorium on EMI payments to be offered by banks, emergency credit lines introduced by PSU's, etc is a good thing.
Is it sufficient for the MSME's to revive?
Commenting on this issue Kiran stated that 10% MSME capital has been announced by RBI, but the announcements stay back up to the paper itself, as several banks are not following the guidelines on basis of the announcement. “If I send 5 people to a banker and ask them to give a job, they can’t! But if I send 5 people to MSME, they will. The bankers need to understand that the MSMEs are the employment providers, whatever announcement they receive from RBI, they need to serve that with positivity”, says H A Kiran. Further, he added that they welcome the initiatives taken by RBI and GOI, however, it is not at all sufficient for the revival of MSME.
Stressing over the major drawback, he mentions that several crores of rupees are due by the govt. agencies, PSU's , Railways, and even big and leading corporates in India to the MSME’s. If they release all the pending payments, the MSME's will bounce back into the system.
“One trump card, if the government places it right to ensure timely payment, the MSMEs will be back in the track' says Kiran. However, explaining the MSME Samadhaan Scheme, he doesn’t seem to be much satisfied. The ministry, of MSME, has launched MSME Samadhaan for empowering micro and small entrepreneurs across the country to directly register their cases relating to delayed payments by any Government agency. The scheme clearly states that the MSME's have to be paid within 45 days if failed: the director or CA of the company may end behind the bars or by paying up to Rs. 3 lakh fine. However, none of the agencies adhere to the regulations.
Kiran insists that if regulations are made by the authorities, why proper reinforcement is not happening? Moreover, he added, many cases filed by the MSMEs are taken up after a long delay of several months or extend up to a year. As a result of which, a lot of MSMEs get closed by the time it came to hearing for the case registered. Considering the present situation, he suggested that all the MSME Samadhaan Scheme cases be given a cutoff time to clear all the pending cases within June 2020.
Covid-19 should work as the path changer for MSME's so that strong regulations are made in this regard. MSMEs are the backbone of economy and regulations are made to support them, as a result, there should be proper enforcement. The government needs to formulate strict laws so that PSUs and other corporates stick to them or end in jail and in fact, there should be an independent body to monitor the casualties.
He informed us about a representation sent by FKCCI under the leadership of its President R Janardhana to Honorable Union Minister for MSME Shri. Nitin Gadkari, which stated ‘Indian industry fights back after COVID-19'. He asked the government to announce interest-free loans or soft loans, as such announcements are already imposed in other countries to assist the MSME. However, he appreciated the government for providing moral support throughout the awful time. Reaching the conclusion he stated, “we are thankful for the press and media, as we are getting a huge response at this time. This is providing confidence and positive energy in the minds of entrepreneurs, who felt the pain, who believes that good things are coming on its way”.
For more details, you can write to H A Kiran at hta_group@yahoo.com