homebusiness NewsBudget 2020: MSEs' pending dues with corporates at Rs70,000 crore, want Sitharaman to address the issue
Budget 2020: MSEs' pending dues with corporates at Rs70,000 crore, want Sitharaman to address the issue
With the economic slowdown hitting businesses and pending receivables from corporates choking working capital, small and medium enterprises (SMEs) sector is seeing one of the toughest times. This is one of the key issues the sector expects Finance Minister Nirmala Sitharaman to address in Budget 2020-21.
With the economic slowdown hitting businesses and pending receivables from corporates choking working capital, small and medium enterprises (SMEs) sector is seeing one of the toughest times. This is one of the key issues the sector expects Finance Minister Nirmala Sitharaman to address in Budget 2020-21.
Nearly Rs 70,000 crore payments of these companies are pending with the large corporates, SMEs told CNBC TV18. This payments crisis has arisen despite assurances from Sitharaman in August last year that payments must be released within 45 days.
H Shankar, chief executive officer and director of Clean Coats Pvt Ltd, said: “There was some movement for two months, and now we are back to the square one. The biggest challenge for SMEs has been recoveries from corporates. Even government subsidies of 12 percent on new machinery is almost always delayed and comes in parts.”
These enterprises continue to face difficulties in arranging finances despite various government schemes, he said.
Khyati Shah, founder of Katalist, said: “Implementation of government funding scheme is very poor on ground. The biggest challenge is arranging collaterals, particularly for women entrepreneurs.”
While Mudra scheme has seen some success, funds raised under this scheme makes SMEs ineligible for other schemes.
This makes most entrepreneurs lose out on broader funding schemes, Shah added.
The government’s much-publicised scheme of getting Rs1 crore funding in 59 seconds is not progressing well on ground. The SMEs are looking for some handholding from banks when it comes to raising capital and collateral free loans.
Chandrakant Salunkhe, chairman and managing director of Macro Group of Companies and president of SME Chamber of India, pointed out that the SME Chamber of India has recommended the government to give collateral free loans up to Rs 15 crore for small industries and up to 30 crore for medium industries.
This, according to him, will help ease out the funding crunch.
Another focus areas for the government has to be on incentivising exports.
Vijay Gujarathi, Regional Chairman, Electronic Industries Association of India (ELCINA) said: “In export market in India has a disability of 10 percent on higher power and funding cost. We get low subsidies on production and logistics and that makes India less competitive in export market.”
Talking on the need to revamp the PM Modi’s Make in India scheme, Salunkhe said: “Currently, no one wants to set up manufacturing, land cost is high, power cost is high, skilled manpower is not available. The government gives red carpet to foreign companies, it should give some focus on SME manufacturing as well.”
T R Vardhan of Mascot Systems, company that makes batteries for IPhones in its Chinese unit, said: “Manufacturing of specialised components like batteries is more expensive in India.”
Importing batteries from China attracts 40 percent duty, so it is better to export it from China itself, he added.
First Published: Jan 30, 2020 9:23 PM IST
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