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FISME writes to FinMin, demands action against raw material providers and revision in NPA norms

The woes of the MSME sector, facing a liquidity and supply crunch, shortage of labour and non-payment of dues forced by the pandemic-induced lockdown in 2020, continues

April 29, 2021 / 02:43 PM IST

Despite a Rs 3 lakh crore emergency package last year, lockdown woes continue to haunt the Micro, Small and Medium Enterprises (MSMEs).

Their industry body, Federation of Indian Micro and Small and Medium Enterprises, has written to Finance Minister Nirmala Sitharaman urging her to rationalise import duty on key raw materials.

They have also demanded that the high prices of raw material be monitored, as it has further pushed MSMEs into a corner during the pandemic.

"During the pandemic, the behaviour of all major raw material producers such as iron and steel, copper, aluminium and polymers, have been highly unethical. They have been jacking up prices during the last six months almost on a weekly basis," said the MSME industry body in its letter.

FISME has suggested that there should be close monitoring of the price movement of top 10 raw material commodities by the Union Secretaries of key economic ministries and import duty on key raw materials be rationalised.

"Abolish safeguard duties, anti-dumping duties and minimum floor prices," urged the FISME.

The industry body has also called for a legislation that provides protection against prosecution due to non-compliance during the pandemic, up to March 31, 2022.

"The credit ratings (CIBIL etc) should not be allowed to be affected during the period. The government needs to convey down its rank and file that no MSME should be shut due to compliance-related rigidity and enquiries will follow wherever cases of this nature are reported," it said.

FISME has also urged the Finance Minister to review the non-performing asset (NPA) norms for small businesses. "More than the requirement of additional funds, the greatest need that has emerged is flexibility in assigning NPAs," it said.

It said that the Special Mention Account (SMA) framework has been devised for normal times and needs to be reviewed keeping in mind the COVID-19 hit years.

"Now, the payment cycles are longer and markets are disrupted. Banking cannot be just excel-sheet based; the system ought to provide much needed flexibility to the banker so that these facts could be factored in," FISME urged in its letter.

As a result of the lockdown in 2020, the MSME sector has been facing a massive liquidity and supply crunch, shortage of labour and non-payment of dues.

The government had announced Rs 3 lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) for MSMEs under the Aatmanirbhar Bharat Abhiyan package in order to mitigate the stress caused by the lockdown.

The scheme was valid till October. Finance Minister Sitharaman had later extended the ECLGS till November 2020 and had further extended it till March 21, 2021. The scheme had now been extended till June 30, 2021.

Shreeja Singh
first published: Apr 29, 2021 02:43 pm