MSMEs face difficulties to resume production because of supply chain disruptions: KASSIA
New Delhi, Aug 13 (KNN) Despite financial relief from the government to cope with challenges arise by the COVID-19 pandemic, Micro, Small and Medium Enterprises (MSME) still facing difficulties in executing their operations and their revival is almost at the stake.
“Supply chain disruptions have made it difficult for industries to renew the production process and or reduce inventory,” said. KB Arasappa, President, Karnataka Small Scale Industries Association (KASSIA) who spoke to Finance Minister Nirmala Sitharaman to discuss issues that are of serious concern to the MSMEs.
He further said that as the pandemic continues, the moratorium already provided for MSMEs is found to be inadequate and needs to be extended.
''MSMEs find it extremely difficult to comply with the GST return filing and payment process due to disruptions in business and absence of cash flows though the enterprise is required to pay GST on invoice value. Often the orders get cancelled and buyers’ default on payments putting the small enterprise in great difficulty,'' he added.
The schemes announced by the government often prove to be difficult to access at the level of the banks due to the rigid postures adopted by the banks ignoring the ground realities.
The KASSIA president also suggested some measures and requested the Minister to consider the same to stimulate demand in the economy so that MSMEs can revive their operations, post pandemic.
“We believe that the Government must step up expenditure on infrastructure which will help not only create and improve the existing infrastructure but generate employment and raise demand for SMEs products and services,” he said.
The industry body said that both central and state governments step up expenditure on public works.
Investments into critical health infrastructure and also urban housing and slum development will help create considerable employment and demand for products and services.
“We would also request the government to inject cash into micro and small enterprises by means of direct payroll support to such enterprises till the end of the financial year and request that interest rate on bank loans be reduced to 6 per cent for a period for MSMEs,” said Arasappa.
''On the lines of the PF payment made by the Government, the Centre may also consider payment of ESI contributions on behalf of the SMEs so that this will take out the stress of cash outgo on those enterprises to an extent,'' he added.
The government must also involve the co-operative banking institutions in extending the ECLGS loans to enterprises so that it helps the rural industries and also widens the distributive network.
The export related units which have suffered due to the pandemic need relaxation in terms of NPA norms to enable them to get necessary credit to fulfil commitments on their exports.
The Government must consider SMA-2 units for funding under the ECLGS scheme, reduce GST rates and ease compliances of returns filing etc, in view of the disruptions.
It must consider payment of rent and utility bills of micro and small enterprises through direct cash injection for a period. Moratorium on repayment of loans needs to be extended till the financial year-end. Banks must relax repayments further with a grace period, KASSIA said.