Traders not eligible to access Facilitation Councils for delayed payment provisions under MSMED Act
New Delhi, Sept 4 (KNN) While the recent Office Memo issued by the central Government does allow traders to get themselves registered as MSMEs in the Udyam portal, they cannot avail of all the benefits available to MSMEs.
The Office Memorandum dated 2nd July 2021 issued by Ministry of MSME decided ‘to include retail and the Wholesale trades as MSMEs and they are allowed to be registered on Udyam registration Portal. However, benefits to Retail and the Wholesale trades MSMEs are to be registered to Priority Sector Lending only’.
The Udyam registration was allowed for NIC code numbers 45, 46 and 47- which cover retail and wholesale activities.
The controversy has arisen because a few traders approached the Facilitation Councils – a quasi-judicial mechanism, set by the States under the MSEMD Act to ensure timely payment due to Micro and Small Enterprises (MSEs).
“We summarily reject the application filed by Traders registered as MSMEs against cases of delay in payments by their buyers because the registration of Traders is only for the limited purpose of allowing them access to priority sector lending by banks mentioned as such in the Office Memorandum of 2nd July 2021”, concludes Dr. D. Gandhikumar, Member of Facilitation Council, Chennai and former President of Federation of Indian Micro and Small & Medium Enterprises (FISME).
Speaking to KNN, Dr. Gandhikumar said that the delayed payment provisions were specially conceived to assist small scale industries in 90s which were later termed as MSEs under MSMED Act 2006 to get their dues in time as most of the small units were becoming sick due to shortage of working capital.
Industry experts are also of the view that allowing traders to tap delayed payment mechanism will overwhelm the already burdened FCs.