The Confederation of Indian Industry (CII) is setting up a CII COVID Rehabilitation and Relief Fund to assist rehabilitation of Micro, Small and Medium Enterprises (MSMEs) amid Coronavirus pandemic, which has deeply affected the global economy.
The MSME sector has suffered a severe impact due to the steps taken to curtail the outbreak. Travel bans, closure of malls, theatres and educations institutions are some of the actions which have led to widespread disruptions in economic activity. “Multiple actions need to be taken on the extension of bank loans, a special fund, steps regarding the filing of GST and improving the welfare of workers. CII stands ready to support MSME sector in this hour of need through the CII COVID Rehabilitation and Relief Fund,” stated Mr Shreekant Somany, Chairman, CII National Council on MSME.
Actions Proposed for Relief Measure:
CII has 67% of its membership as SME and works closely with the Ministry of MSME. CII organized a special virtual meeting of its SME members on assessing the impact of Covid-19 on the business and also proposes suggestions to mitigate the adverse impact. Over 100 MSME members from India participated in this virtual meeting, which represent sectors of auto, light engineering, forging, electronics, ceramics, construction equipment, décor solutions, financial services, pharmaceuticals, chemicals, IT and ITeS etc.
“CII announced its initiatives at the interactive meeting with Prime Minister Modi earlier today”, Kirloskar said.
During this pandemic, the MSME is likely to face a cash crunch, considering this, CII has requested for additional ad-hoc sanction of working capital to the tune of 25% of sanctioned limit as a relief measure. CII also suggested deferment of EMIs and interest rate on the working capital. Setting up of a special MSME factoring fund to enable MSMEs to discount their bills to approved retailers in 15 days and permit retailers to pay in 120 days would help in faster realization, it added.
Creation of a corpus by the Government to help MSMEs tide over the crises would help them to pay wages, according to CII. Extension of NPA norms in genuine cases to 150 days from the present 90 days. To overcome the temporary liquidity crunch and provide relief, ad-hoc limits to an extent of 25% of the sanctioned limits may be allowed by banks on SOS basis, if required by the industry, said CII.
CII also laid emphasis on taking the measures for improving the welfare of the MSME workers during this temporary shutdown period. Measures will include supporting laid-off workers during this period, handling the statutory compliance of compensating workers in case of shutdown, exploring insurance cover options, 90 days extension for payment of Employer’s contribution of PF and ESIS, allowing of CSR funds to support payment of wages to laid off workers and more.
It has been further proposed by CII that the Government should draw contingency plans for 3 periods – Till 31 March, for Next 2 months till 31 May and then for Next 2 months till 31 July. CII added that relief should be provided so that credit rating of Brands and Retailers is not adversely affected due to delays in repayment of bank loans, interest, EMI, etc. together with ensuring that punitive action is taken by NCLT for delays of repayments etc. till 31st December 2020.