25,000 MSMEs stuck in companies under CIRP, says FISME
New Delhi, Dec 31 (KNN) The apex association of small scale industries, i.e. the Federation of Indian Micro and Small & Medium Enterprises (FISME) is of the view that the small scale vendors affected by the insolvency resolution process could be at least 25,000 contrary to the Insolvency and Bankruptcy Board of India (IBBI) which has admitted around 3,200 cases so far.
The dues of 25,000 MSMEs could be stuck in companies that are under the Corporate Insolvency Resolution Process (CIRP) and another 75,000 could be affected soon, FISME indicated.
In a memorandum to Prime Minister Narendra Modi on December 27, FISME said that stressing for payment of MSME dues stuck in Corporate Insolvency Resolution Process (CIRP) under Insolvency and Bankruptcy Code as MSMEs are classified as Operational creditors, FISME presented two specific solutions to the Government.
To make Indian manufacturing competitive, FISME stressed the need to focus on the three functions of the Government which have direct bearing on cost of doing business.
FISME explained that Government had three distinct functions: As a ‘Regulator’, ‘Provider of major inputs/ services’ and ‘Buyer of Goods and Services’.
"FISME's research bears out there are 25,000 companies that are already affected and 75,000 more are likely to be affected. Our estimates say that MSME dues are less than 1.5 per cent of asset value under CIRP and could be clubbed as part of the cost of CIRP," the organisation stated.
To address the extreme stress being faced by MSMEs due to host of factors and slowdown, FISME demanded ‘immediate re-fixation of limits both Fund and Non-Fund to 50% of turnover and the ageing period of receivables/stocks increased to 180 days, without additional collateral’.
Terming the three TReDS bill discounting platforms as transformative, Secretary General FISME presented an 11 point agenda to increase the cumulative turnover of the platforms from current level of Rs. 8000 crore to Rs. 100,000 crore in in next 18 months to further ease liquidity in MSMEs.
Further, it demanded framing of Rules under IBC for proprietorship/ partnership firms also which constituted 97% of MSME sector and were denied access to IBC as current Rules for Companies only.