Representations were made by MSME sectors claiming that even after sanctions there is a lack of loan disbursal and long delays in settlement of dues by the government departments and PSUs which is affecting their ability to sustain business cycles, liquidity-starved micro, small and medium enterprises.
With regard to such representations the Finance Minister Nirmala Sitharaman’s meeting with MSME representatives was part of a series of such sessions lined up by her with important stakeholders up to August 11 to come up with plans for critical sectors amid fears that the economy might be slipping into a sustained slowdown.
The minister promised to address the issue of delay in release of dues by the government departments and promised remedial steps to alleviate the difficulties of MSMEs.
The various issued raised by MSMEs are,
- As per the scheme, MSMEs registered under the GST are eligible for loan up to Rs.1 crore in just 59 minutes through ‘psbloansin59minutes.com’ portal. However, “as against sanctioned, only 10% is being disbursed by banks under 59-minute scheme” as clarified by Ashok Saigal, co-chair of CII MSME Committee.
- A complained also made by the MSMEs that despite 70% guarantee from the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), the firms have not been able to secure loans from banks in many cases.
- Another issue was raised by the MSMEs was that the definition of the turnover/investment-related should be revised as Currently a firm with 5 crore investment is classified as ‘small’ while investment over 5 crore are ‘medium’ but machine that cost 5 lakh in 2006 is not valued at 15 lakh,” and the definitions were brought in 2006 and have since become dated due to inflation.
- MSMEs also included a demand to exempt from capital gains tax for the sector if gains are reinvested in business. Among others, they sought rationalisation of penalty for late filing on MCA as it is same for large and small companies.
- They also raised the issue of VAT refunds not being transferred to GST regime by states.
After considering the issues raised by the MSMEs, the minister has positively asked all the industry bodies to give in writing their suggestions to prepare an action plan to look into the issue.