The coronavirus pandemic has put more than two million micro, small and medium enterprises (MSMEs) employing 1.3 crore workers in a major crisis. The Tamil Nadu Small and Tiny Industry Association, the apex body of MSME units in the State has approached Union Finance Minister Nirmala Sitharaman and Union Minister for MSME, Nitin Gadkari with pleas to save the sector and the employees from an impending disaster.
The 45-day lockdown due to coronavirus pandemic has resulted in these units losing their orders from major industries and other clients. The migrant workers have gone back to their respective villages and all kinds of income sources has been dried up putting the entrepreneurs themselves in trouble.
S Anburajan, president, TANSTIA, reminded the Centre and State Governments that it was Union Minister Gadkari who said that the MSME units are on the verge of collapse.
“In spite of repeated calls by various MSME associations in the State and in the country nothing constructive has been done to this sector,” said Anburajan.
“Some of the Banks have deferred the equated monthly instalments (EMI) for three months with some condition which in turn will make the MSME to pay more at a later stage due to the accumulated interest added in the principal amount. Instead of relief this will increase financial pressure on MSME units,” Anburajan told union finance minster in a memorandum he has sent.
The TANSTIA president told The Pioneer that the MSME units were willing to pay back all the loans availed by them but the Central Government and the Banks should show some compassion. “What we are asking is that the Banks should defer the EMI payment by six months and the waiver of the interest for this period. We have also requested that the pending principal amount should be considered as separate loan and allowed to be paid back with 5 per cent interest in easy instalments,” said Anburajan.
Banks should be advised to defer all the loans for a period of six months instead of three months which needs to be regulated by RBI instantly to save the MSME sector, the TANSTIA has demanded further.
The industrialists have demanded a hike of 25 per cent on all working capital loans. “As on date, the practice is that the Banks retain 25 percent of the loan amount in the form of our finished products which means that for every one lakh rupees of loan we avail, the Banks release only Rs 75,000 and retain the remaining part as some kind of surety for the loan. This practice has to go as we will return the loan promptly once the crisis is blown over,” said S Vasudevan, an entrepreneur and joint secretary of TANSTIA.
The association has demanded that the interest on all working capitals be charged at 5 per cent up to March 2021.
The TANSTIA also demanded that the Securitisation And Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act) should not be imposed up to March 2021. By this Act the Banks were empowered to launch proceedings for seizure of property if the borrower d
elays to pay back the principal with interest within two months of the stipulated term. “We want the Government to exempt micro units which have borrowed up to Rs 2 crore from the purview of this dreadful act,” said Vasudevan.
The grievances of TANSTIA found an echo in K Hari Thiagarajan, chairman, Confederation of Indian Industries (Tamil Nadu State Council).
“The MSME units should be protected by offering them all kind of concessions. The MSME sector, which is one of the largest employment providers, is facing severe crisis and this is the time to offer help in the form of waiving off bank loans and concessions in Goods and Services Tax. We expect lot of job losses and it is sure that 30 per cent of the MSMEs would have to shut down immediately if no help is forthcoming,” said Hari Thiagarajan.
The plea by TANSTIA comes closely on the heels of the request sent by Tiruppur Exporters Association to Prime Minister Narendra Modi with a request to save the knitwear cotton industry from sinking.