MSMEs urge Centre to widen coverage of Emergency Credit Line Guarantee Scheme

A consortium of 25 MSME associations has urged the government to widen coverage of the Rs 3-lakh crore Emergency Credit Line Guarantee Scheme and classify distressed units as fully dead, near dead, critically injured, minor impacted and no impact establishments, for targeted policy interventions.

As part of its 'Save MSME Campaign', the consortium has submitted various suggestions to the Prime Minister's Office and government departments.

Terming the Emergency Credit Line Guarantee scheme a "non-starter", the consortium said only about 10 per cent of disbursal has been achieved as on date. The scheme was unveiled by Finance Minister Nirmala Sitharaman over a month ago.

"Those who are dead need honourable exit, those who are near dead require ventilator support. General treatment or solution can only be a First Aid and cannot yield permanent solution," said K E Raghunathan, convenor of the consortium.

The consortium proposed to halve the income tax rates to 15 per cent for proprietors and partnership firms to help them tide over the COVID-19 crisis. They have also suggested a goods and services tax (GST) exemption to small enterprises with up to Rs 5 crore annual sales.

It proposed to change the eligibility criteria for collateral-free loans to cover all the firms that had not been classified as non-performing assets (NPAs) by banks as on March 22, 2020.

It also suggested that the emergency credit should be offered without banks insisting for additional documents. "This will help those who need money to avail it at this crucial juncture," Raghunathan said.

The consortium also sought immediate exemption from levy of GST for companies doing up to Rs 5 crore turnover mainly for 'micro' units till March 2021, reduction in the income tax rates for firms – proprietorships, partnerships, LLPs -- from the highest level of 30 per cent to 15 per cent at par with new manufacturing companies.

It also sought provision of adhoc interest subsidised loan of Rs 25 lakh or up to 6 months of their monthly fixed overheads for establishments that are without any loan currently or start-up.