The technology sector on Wednesday lauded the stimulus measures announced by the government but raised concerns on issues like paying salaries and pending vendor dues which will not be cleared by the new loan facilities.
Mobile devices industry body ICEA said the stimulus announced by the government will propel and stabilise the growth of micro, small and medium enterprises (MSMEs).
The government has announced an about Rs 6 lakh crore package, including Rs 3 lakh crore of collateral-free loans for small businesses and a Rs 30,000 crore lifeline to non-bank and housing finance companies as part of measures to help the economy tide over disruptions caused by the coronavirus lockdown.
"Conceptually it is a heavy hitter package and can potentially stabilise and propel the MSME sector towards stability and growth. Delivery of credit will be the key though," India Cellular and Electronics Association (ICEA) Chairman Pankaj Mohindroo said.
Finance Minister Nirmala Sitharaman announced the creation of a fund of funds for MSMEs, which will infuse Rs 50,000 crore equity in units that have growth potential.
However, Mohindroo said equity infusion through the fund of funds will depend on the speed of the daughter funds having the management capability and acumen.
"The daughter funds need investments from other sources which are very stretched and strained at this time. The measures for easing cash flow like lower TDS, lower provident fund rates etc are welcome," Mohindroo added.
After-sales services startup 247around co-founder and CFO Anuj Aggarwal said the reduction in EPF contribution for one quarter, TDS rate reduction and pending IT refunds would help in creating additional liquidity in the near term.
"Since MSMEs which don't have existing loans or are not stressed/NPAs fail to qualify for the emergency credit line, I believe many small enterprises would not be able to solve their current issues like paying salaries, making vendor payments and buying material etc. and this would be a disappointment for those. We are still checking the finer details and discussing it with experts," Aggarwal said.
Credit intelligence firm Creditwatch said collateral-free automatic loans extend the previous loan moratorium benefits. The new terms should benefit as many as 45 lakh businesses and help with working capital requirements in the coming days.
"We believe setting the threshold for eligibility, Rs 25 crore outstanding and Rs 100 crore turnover, is helpful but it is yet to be seen whether public sector banks will underwrite such unsecured loans at a faster pace on the back of these terms.
"The real-need of the hour is to move to cash-flow based lending," Creditwatch founder and CEO Meghna Suryakumar said.
Electronics industries body ELCINA said that self-reliance was the cornerstone of Prime Minister Narendra Modi's speech on Tuesday, and Make in India would mean higher value addition in electronics manufacturing sector.
"While we have moved ahead in this direction, much more needs to be done to establish a seamless system. Greater transparency, education and skilling and an effective bureaucracy are the need of the hour," ELCINA Secretary General Rajoo Goel said.
Mobile accessories maker Ambrane India lauded the relief package.
"We look forward to the relaxations that were suggested today, and are quite hopeful that the relief will definitely help in abating the economic severity of the corona pandemic, and will act as a stimulus to revive the economy," Ambrane India Managing Director Ashok Rajpal said.
Social media firm Sharechat said India's dominance in the global digital economy will further grow in the coming years and the Prime Minister's call to make an 'Atmanirbhar Bharat' would play a major role in achieving this vision.
"As a domestic company we look forward to contributing to the clarion call by our Prime Minister of promoting local brands. We all are in this together and we want to thank our Hon'ble PM Modi for guiding us through these difficult times," Sharechat Director for Public Policy Berges Malu said.