MSME sector on the Verge of Collapse, says Nitin Gadkari

Nitin Gadkari, in a video conference meeting with the members of SIAM institute, said that MSMEs are at their worst worse state. Further, he mentioned the high pendency of dues owed to MSME units by the central government, state governments, public sector undertakings, and major industries. Besides, he requested all members of major industries to release payments due to MSMEs within a month.

Rolling Fund Scheme

Gadkari further stated about inducing a ‘rolling fund’ scheme, which will help the MSME sector to get working capital. In the rolling fund scheme, the interest due on payment to MSMEs will be borne by either the supplier or the purchasing industry. Also, on a webinar with Assocham last month, Mr Gadkari confirmed setting up of a fund amounting to INR 1 lakh crore by the government. The fund will repay outstanding payments owed by the central and state government undertakings to MSMEs.

Consequently, the proposal will be placed before Cabinet once the finance ministry approves it. Besides, he said that the finance ministry must quicken the processing of tax refunds to MSMEs. This would help to ease the liquidity crunch. 

Need for Import Substitution

That apart, he encouraged the organisations working for MSMEs to prepare data of international companies working with China. This may help Indian companies in reaching out to them, inducing them to set up units in India. Further, he emphasized on import substitution and replacing imports with domestic products is the need of the hour.

Besides, he revealed that the government expects restructuring of 25 lakh MSME loan accounts by December 2020. This restructuring amount is up from 6 lakh till March 31, which is over 300% increase. Also, the government is planning to increase the working capital limit of MSMEs by 20%. 

In all, Gadkari acknowledged the tough time. He encouraged the industries to keep a positive outlook to tap opportunities after the lockdown. 

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