Delayed payment to MSMEs remains a concern: Assocham president

One of the key reasons for the stress in micro, small and medium enterprises (MSMEs) is delays in payments for the supplies and services offered to big firms, including the PSUs, and the government should find a solution to this, said Ajay Singh, the newly appointed president of industry body Assocham.

Singh, who is also the chairman and managing director of SpiceJet, said the government’s focus on capital expenditure, especially investment on infrastructure development, will boost economic growth and help MSMEs. However, “the issue of timely payments to them (MSMEs) remains a concern.”

The government has increased capital investment outlay for the current financial year to Rs 10 lakh crore, which is 33% higher when compared with the previous year.

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“The general uplift in the economy is helping MSMEs as well. But certain industries remain under stress... One of the problems is the inability to get timely payments,” Singh told DH.

He said around 4.5 lakh MSMEs are associated with Assocham and the industry body would be pitching for their relief. Timely payments and fair interest if the payments are delayed are among the key pitches.

Singh said some sectors like hotel, aviation and tourism are still “grappling with the pains that they experienced for a protracted period of time during Covid.”

Many of these companies were unable to pay their statutory dues in time. “There are various dues to government authorities. For such charges we would request moderation of interest that the authorities charge on such delayed payments,” he said. Singh said the interest charged on delayed payments on statutory dues are around 18-20%, which should be brought down to a reasonable rate.

“Clearly there was stress which is why they were unable to pay statutory dues. For those statutory dues there could be some concessions. Interest rate on that is quite high,” he noted.

Singh said the credit guarantee scheme extended by the government has proved very helpful for a large number of MSMEs.

Emergency credit line guarantee scheme (ECLGS) was launched in May 2020 as a part of the government’s support to help MSMEs and other business enterprises in meeting their operational liabilities and restarting their businesses disrupted by Covid pandemic.

With effect from April 1, 2023, the government has introduced the revamped credit guarantee scheme for MSMEs with budgetary allocation of Rs 9,000 crore.