Covid-19 lockdown 2.0: Need govt support to keep units open, say MSMEs

On Tuesday, MSME Minister Nitin Gadkari had stated during a meeting that unpaid dues of MSMEs at the central and the state levels will be released at the earliest.

Micro, small and medium enterprises (MSMEs) across the country are keeping a wary eye on the government's decision to allow select manufacturing units to reopen on April 20. While MSMEs in most sectors have welcomed the latest move, they argue that lack of financial support from the government might result in these firms not running even if they manage to reopen.

The Confederation of Indian Industry (CII) has recommended focus primarily on increasing the financing available to MSMEs with relaxed collateral norms, an extension of the RBI moratorium and wage support. It also suggested expediting fund of funds for MSMEs which has been under the government's consideration and augmenting the assets of MUDRA Bank.

“Many MSMEs are an important part of larger supply chains and their health has a bearing on the supply chain, including large firms. Therefore, special, immediate, and substantive support measures are required to see MSMEs through this crisis," said CII Director General Chandrajit Banerjee.

To ease the liquidity crisis that most MSMEs had been facing for the last couple of months, Assocham has suggested a 40 per cent government or Reserve Bank of India guarantee on fresh loans, while the balance risk premium can be made up by a huge spread available to banks between their cost of funds and the yields.

On Tuesday, MSME Minister Nitin Gadkari had stated during a meeting that unpaid dues of MSMEs at the central and the state levels will be released at the earliest. He estimates Rs 40,000-50,000 crore could be injected into the market by releasing the due payments.

Coronavirus: Exporters seek duty reduction, logistics support from Centre

Meanwhile, Irdai was asked to review existing insurance products to ensure risk cover against loss because of abnormal delay in delivery of shipments.

Industry and exporters bodies on Thursday sought logistics support and duty reduction from the government to withstand the onslaught of the coronavirus outbreak (COVID-19).

At a meeting called by the commerce department, they said products that rely on imports have been affected by the outbreak.

Meanwhile, the Department of Financial Services (DFS) has asked the Insurance Regulatory and Development Authority of India (Irdai) to review existing insurance products to ensure risk cover against loss because of abnormal delay in delivery of shipments. Irdai has also been asked to modify the terms and conditions of such policies, if necessary.

Ravi Sehgal, chairman of Engineering Export Promotion Council, said there were about 30-40 per cent engineering products that were seeing increase in exports, but there were others that had imported components, and these were affected. Shipments to Iran, Italy or Southeast Asia were impacted, he said.

Sources said that for auto parts, ships were taking too long and this was affecting the production cycle, and the industry would have to spend more on air freight. “We have sought 5 per cent duty reduction to offset part of air freight cost. As for electronics, the stock will be depleted by April and a plan needs to be drawn up now,” one of those who attended the meeting, chaired by Minister of State for Commerce and Industry Som Prakash, said.

Sources said some firms had imported plant and machinery but could install these because of a lack of professionals thanks to travel restrictions. “Once it resumes, we request faster clearance for these professionals,” one person said.

Meanwhile, DFS advised all public sector undertakings to set up special cells to provide full assistance to industry segments and micro, small and medium enterprises and process their requests with sensitivity. Banks were also requested to provide support to units that were identifying opportunities for import substitution