Hyderabad: 'MSMEs need urgent bail-out package'

Hyderabad: MSMEs need urgent bail-out package
CAPMA's Raja Mahender Reddy

CAPMA's Raja Mahender Reddy says coronavirus crisis, lockdown pushing small businesses into financial doldrums

Hyderabad: The country's lakhs of micro, small and medium enterprises (MSMEs) that employ over 12 crore people, are in the urgent need of adequate bail-out packages from the Centre as well as the State governments to tide over the unprecedented crisis triggered by COVID-19, a global pandemic unleashed by coronavirus, that has brought India to a standstill, says Manda Raja Mahender Reddy, president, Confederation of All India Small and Medium Pesticides Manufacturers' Association (CAPMA).

"COVID-19 is spreading like wildfire around the world. In the context, the central government led by Prime Minister Narendra Modi did a right thing by announcing a 21-day lockdown to rein in the deadly virus. But the sudden turn of events caused by coronavirus is causing immense damage to MSMEs in the country. Scores of MSMEs will go out of business if the governments don't take remedial measures and announce bail-out packages forthwith," Reddy told The Hans India. Reddy, who is also vice chairman of South India MSME Joint Action Committee and chairman of Federation of Pesticides Manufacturers Assn (FOPMA), felt that the Centre and State governments should initiate drastic steps to save the key MSME sector. Besides above-mentioned bodies, he is also president of Crop Care Chemicals Manufactures Association (CCMA) and Executive Committee Member of Federation of Telangana Small Industries Association (FETSIA).

He said that MSMEs would not be able to pay salaries for the month of March if the loans and interest payments on loans were not rescheduled in the wake of lockdown. "Banks will deduct interest payments accrued on loans on March 31 from the accounts of MSME companies. If this happens now at time when MSMEs have suspended operations due to coronavirus, they will not have enough funds to pay March salaries in the first week of April. Further, MSMEs will not have funds for procuring raw materials when lockdown is lifted," Reddy explained, underlining the need for the Centre to direct public and private banks not to deduct interest payments from MSME accounts this month.

"Interest payments should be deferred by three months. Thereafter, the accumulated amount should be collected in monthly installments for six months," he suggested. He also said that term loan repayments should be rescheduled by at least six months. "Also, banks should not reduce work capital limits, citing fall in turnovers. Further, March, April and May GST payments should be deferred by six months. Thereafter, the accumulated amounts should be collected in installments. That way, MSMEs will have enough liquidity to put the stalled operations back on track," he maintained. Provident fund and ESI payments should also be rescheduled and companies should be allowed to make these payments in installments at a later stage, he added. On the power charges, he pointed out that HT consumers are required to pay fixed charges whether they use power or not. "The State governments should reschedule the payment of these fixed charges and allow companies to clear them in installments after lockdown is lifted," he observed. Reddy also said that Commercial Tax Department of Telangana has been harassing dealers for interest amounts on delayed VAT and CST payments.

"Suddenly, the department woke up and is demanding dealers to clear the interest payments online. Dealers are getting phone calls from officials during the lockdown period, demanding payments. The State government should take an immediate action on this," he said.

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