Impact of second wave of COVID-19 and consequence of lock down period - Operations of MSME Industries
Coimbatore: Federation of MSME associations have put out an open letter to central and state governments with their requirements that could help them weather the impact of Covid-19.
The letter sent in verbatim:
“During 2020, with the able guidance and direction of the Government, RBI announced an economic package to various categories of industry to revive the economy, due to which all the leading Public Sector Banks announced different schemes to help the industry, particularly the MSME sector.
The loan scheme announced under Emergency Credit Line Guarantee Scheme (ECLGS) during last year with one-year moratorium period was very useful for most of the MSME units to tide over the crisis and to sustain in the market last year. The interest moratorium for six months also helped all the MSME units, industries, individuals, traders etc. due to the nation-wide lockdown imposed in the country last year.
After the Corona imposed lockdown last year, the MSME units have been slowly recovering but were completely affected by the unprecedented and abnormal increase in prices of raw materials to the tune of more than 70%. Hence, there has been slow down in the plan of recovery of most of the units in the country thereby the working capital of the MSMEs has eroded considerably.
Due to the prevailing second wave of COVID 19 pandemic, all the sectors especially MSME sectors have been affected very much. They have represented the following points to the Finance Minister, Nirmala Sitharaman, MSME Minister Nitin Jairam Gadkari, Minister for Labour Santosh Kumar Gangwar, and Minister for Health and Family Welfare Dr. Harsh Vardhan, Government of India, Chief Minister M.K.Stalin, Government of Tamil Nadu and requested their favourable consideration and urgent action.
Request to Finance Minister
· The interest moratorium for six months for MSME industries has been debited with the entire six months interest on 31st March 2021, which has put all units under severe stress.
· One year interest moratorium for principal repayment will start for all the units from June 2021 and the units which are already under stress due to interest moratorium and price increase of raw materials, will not be able to meet the payment deadline set by PSBs and MSMEs cannot handle this crisis. More than 80% of the MSME units will become NPA and will be forced to shut down their operations.
· Moratorium period to be extended for another one year for both term loan repayment and interest dues, till 30th June 2022.
· Additional Fresh 20% loan under Emergency Credit Line Guarantee Scheme to the industries based on their working capital/cash credit limits, by banks and NBFCs with a repayment period of five years with two years’ lock-in period, to tide over the economic crisis.
· Waiver of interest on all loans including cash credit facilities for another one year period till 31.3.22.
· COVID Stimulus package to all MSME industries for the loss of business during the lockdown period to be expedited.
· Relaxation of the NPA norms is a must and extension of the same till 31.03.2022, due to the prevailing extremely critical situation.
· To release the outstanding payment from PSUs and other Government Sector immediately to MSMEs.
· To create demand and consumption, GST has to be revised downwards to at least two slabs i.e. 10% and 15%.
· Pending GST and IT refunds to be released to industries on a war footing basis.
· Fuel and Petroleum products should come under the purview of GST on lower slab.
· MSMEs should be exempted from interest or penal action for any discrepancies.
· NIL GST to be charged for another two years for manufacturing Oxygen Generators.
· Concentrators, Pulse oximeters, PPE Kit, Mask, face shield, Gloves, and all other pandemic related equipment.
· The existing upper limit of 25 crore for loan restructuring needs to be enhanced up to Rs.100 crores.
Requests to Minister for MSME
· COVID vaccination to be arranged immediately for all the eligible persons through special campaigns.
· A committee needs to be formed by the Central Government to regulate the 25% compulsory purchase Obligation of PSU’s, Defence and Railway from MSE units. and request that this limit be enhanced to 40%.
· Technology Upgradation Fund (TUF) Scheme to be introduced for expansion and modernisation of MSEs and Accelerated Depreciation for three years to be extended to all MSEs which go for expansions and modernisation.
· Special Insurance Package with less premium to be provided for the Micro and Small entrepreneurs to take care of their liabilities in case of any unforeseen incident due to COVID.
Requests to Minister for Labour
· Exemption from payment of ESI and Provident Fund on the salaries being paid to employees during this lockdown period.
· Inspector Raj in MSEs to be eliminated and self-Declarations by individual MSE units should be honoured and accepted.
· Subsidies to be allowed for creating hostel/accommodation facilities for migrant workers in the respective industrial premises.
· State and Central Government to advise the migrant workers not to move from the workplace, to arrest the spread of COVID-19.
· The surplus funds available with ESI can be used for treatment of COVID patients.
· To provide Unemployment Allowance to the employees as per Rajiv Gandhi Shramik Kalyan Yojana.
· To provide welfare measures for employees covered under Section 2(9) of ESI Act, 1948, as per Atal Beemit Vyakti Kalyan Yojana (ABVKY).
Requests to Minister for Health and Family Welfare
· COVID vaccination to be arranged immediately for all the eligible persons through special campaigns.
· Allocation of medical oxygen to all hospitals and COVID care centres.
Requests to Chief Minister, Govt. of Tamil Nadu
· COVID vaccination to be arranged immediately for all the eligible persons through special campaigns.
· Electricity Bills, Property Tax, Professional Tax, Licence Fees, Pollution Control Board Fees and all Statutory payments need to be deferred by another six months.
· To waive off Minimum Charges for LT Consumers and Maximum Demand Charges for HT consumers.
· Loans from State Financial Institutions like TIIC etc. needs to be rescheduled for six months and the interest rate should be NIL, during the lockdown period.
· State and Central Government to advise the migrant workers not to move from the workplace, to arrest the spread of COVID-19.
· Stimulus package (funds) to be allotted to the employees for the lockdown period.
· Stimulus package to the MSME industries for the loss of business during the lockdown period.
MSMEs requested the above reforms to help industries bounce back after the lockdown.