Reminding corporates of legal provisions about clearing dues to micro, small and medium enterprises (MSMEs) within 45 days, government has written to top management of 2,800 companies to pay off the outstanding to small firms.
The MSME Ministry has urged the corporates to make payment of pending dues in the current month as it will help small companies tap business opportunity in the upcoming festive season. It said that if the cash flows of MSMEs improve, they can revive their business in the festive season.
"In fact, some of the MSMEs look for such a period for their sustenance of whole year. Thus, timely payment of their receivables at this time will not only support the MSMEs and their dependents in this festive season but will also sustain many of them for full year. Therefore, Ministry has requested the corporates to see and make payment as soon as possible, preferably in the present month," an official statement from MSME Ministry said.
The move has come close on the heels of similar communication sent to 500 top companies in September advising them to clear the pending dues. Noting the success of its earlier appeal, the MSME Ministry said that "very good" response has been seen.
"Out of the last five months, the maximum payments to MSMEs have happened in the month of September, 2020. Not only that, in that timeframe, even the procurement and transaction appears to be maximum in the month of September," it said.
The Ministry stated that more than Rs 13,400 crore have been paid by Central Public Sector Enterprises (CPSEs) alone in the last five months. Out of which, payments worth Rs 3,700 crore have happened in September alone.
Provisions under the MSME Development Act, 2006 requires buyers to make payment to MSMEs within 45 days. As per related regulations, the corporate entities are also supposed to file half-yearly returns with the Ministry of Corporate Affairs about the dues of MSMEs.
It has, however, been noticed that a large number of corporate entities do not comply with the provisions. Besides advising the corporates to comply with the twin provisions of the MSME Development Act, the government department has also asked them to join bill discounting platform TReDS.
"It is mandatory for all CPSEs and the companies with turnover of more than Rs 500 crore to join this platform. However, many companies are yet to join it or transact on it. Corporates have been requested to check whether their group/company has joined the TReDS platform and is doing transactions," the MSME Ministry emphasised.
MSMEs are among the worst affected by the economic crisis triggered by coronavirus pandemic. The government has taken a slew of measures including emergency loan at concessional rates to ease the pains of the sector, and help them survive the tough time.
Copyright©2021 Living Media India Limited. For reprint rights: Syndications Today