Industry body CII has urged centre for immediate release of government dues to support MSMEs amid coronavirus lockdown. It has also requested enhanced working capital, moratorium extension along with wage support. The apex body has further asked the government to provide additional funding through Mudra Bank and other MSME-focussed banks.
The industry body has established a 'CII COVID Rehabilitation and Relief Fund (CRR)' to assist small enterprises or MSMEs.
The Confederation of Indian Industry (CII) has been highlighting the need to focus on small businesses, especially Micro, Small and Medium Enterprises (MSME), as they are worst hit by the coronavirus pandemic.
CII has outlined a list of suggestions it hopes the government will look at to boost growth of the MSME sector.
Detailing the suggestions, Chandrajit Banerjee, Director General, CII said, "With limited resources, MSMEs do not have the capacity to withstand massive shocks like COVID 19. In addition, many MSMEs are an important part of larger supply chains. The healths of these MSMEs have a bearing on the entire supply chain, including the large corporates".
"Therefore, special, immediate and substantive support measures are required to see the MSMEs through this crisis", added Banerjee.
Here are key highlights of the CII suggestions:
- Increase working capital limits, with relaxed collateral norms. Additional working capital equivalent to April - June wage bill of the borrowers (backed by a Government guarantee, at 4-5 per cent, with a refinance guarantee from RBI) is needed by small businesses to bounce back.
- Additional reconstruction term loans with a government guarantee on default, up to 20 per cent.
- Extend the three-month moratorium period allowed by RBI to 6 months along with increasing the assets of Mudra Bank and other MSME-focused banks.
- Clear all outstanding government dues to MSMEs, including payments for supply for goods and services to PSUs by MSMEs, GST refunds, various state and central government incentives for MSMEs.
- Government departments that make purchases should not impose delay penalties as delays are bound to happen due the disruptions caused by the lockdown. Completion dates of the government projects need to be reconsidered and extended without liquidated damages, till such time the fear of COVID-19 is over.