FISME terms COVID-19 impact alarming, seeks slew of relaxations for MSME to stay afloat
New Delhi, Mar 24 (KNN) Sudden announcements of widespread lockdowns of cities and massive disruptions in supply chains seem to have brought Micro and Small and Medium Enterprises (MSMEs) in India to their knees.
Terming the situation as 'alarming', Federation of Indian Micro and Small and Medium Enterprises (FISME) has approached the Prime Minister Narendra Modi for taking immediate steps to halt mass 'closures of firms due to the crisis and prevent drowning of enterprises to save MSMEs and associated livelihood'.
"Lock downs and social distancing, critically required as they are, have strangulated demand, disrupted supply chains and are set to bring the economic engine to a grinding halt. The scale of disruption is overwhelming and has left none of the sectors- manufacturing or services, unscathed", says Dr. Animesh Saxena, President, FISME.
'Every enterprise has some fixed outgoes like wages, electricity bills, interests, taxes-duties, EMIs, Loan instalments etc; which when become due and are to paid for. Operating in such situation results into shortage of working capital due to locking of funds in stocks receivables and gap in actual borrowing and required security to cover it', he added.
In line with other nations, FISME demanded 'a liberal bail-out package on an urgent basis'.
FISME has demanded that in 'no case MSMEs be declared NPAs at this juncture (non-habitual defaulters).
Other flexibilities sought by FISME include, Cash Credit limits of MSMEs to be increased by at least 20 per cent including ease of margin requirements. Further that "stocks" and "Receivables" for security purposes be made fungible.
FISME has requested that the receivables period may be increased to 6 months and further six month moratorium to be allowed for all statutory/ tax payment.
As lockdowns have been ordered by the State, they have also sought disbursement of outstanding wages of units closed due to Covid-19 by the Government.
'This is bare minimum needed to stay afloat. Banks, particularly the public sector banks, ought to prime the economy at the time of crisis and they should be held responsible if they fail to do so' says Dr. Saxena.