Coimbatore: Industry representatives in Coimbatore and Tirupur called Union finance minster Nirmala Sitharaman’s announcements on Wednesday for reviving MSMEs a much-needed measure at this juncture.
Collateral-free loans and subordinate debts for stressed units drew much appreciation from industrialists.
Representatives of micro, small and medium enterprise (MSME) associations have, for more than 40 days of the lockdown, been seeking assistance or a revival package from the Centre to tide over the fund crunch due to the lockdown. They said most of their demands have been met.
R Ramamurthy, president of the Coimbatore District Small Scale Industries Association (Codissia), said the Centre had taken into account their representations. “The Centre understands MSMEs. The highlight was the announcement of a subordinate debt provision of Rs 20,000crore for stressed and NPA MSMEs. They have also categorised MSMEs as standard ones, for which collateral-free loan of Rs 3lakh crore has been announced, stressed or NPA MSMEs, and potential MSMEs for which a Rs 50,000 crore ‘fund of funds’ has been created. This shows the Centre has felt the needs of the sector,” he said.
J James, district president of the Tamil Nadu Association of Cottage and Tiny Enterprises (TACT), said the collateral-free loan of Rs 3lakh crore, with a four-year tenure, was a welcome move, so was the subordinate debt for stressed MSMEs. “However, there has to be certain flexibilities in the banking sector or many micro units may not be able to avail the loans. If banks provide loans based on our current papers, most of us can’t benefit. For the past three years, we have been in one crisis or the other. The banks should provide us capital loans based on our balance sheets from three years,” he told TOI.
Representatives of textile industry in Tirupur said the announcements were favourable to them as 75% of Tirupur’s textile units are MSMEs. Raja M Shanmugam, president of the Tirupur Exporters Association, said the ‘fund of funds’ will help potential units to expand operations by showing previous performance. “The Rs 20,000crore subordinate debt for stressed and NPA industries will help revive those industries quickly.”
Another ‘bold’ move, the industrialists said, was reclassification of MSMEs. As investment limits have been increased for MSMEs, the ecosystem, both in Coimbatore and Tirupur, will get a boost and more industrial units will be benefited.
Of late, micro units were purchasing automated machineries, James said. “A CNC machine costs around Rs 25lakh. So, micro units can invest more in machinery without being apprehensive of losing their ‘micro’ status and benefits.”
Some industrialists, however, said they were disappointed with the announcements as none of them will help MSMEs immediately.
S Surulivel, former president of the Coimbatore Sidco Industrial Estate Manufacturers Welfare Association (Cosiema), said the only relief was the announcement that all pending payments from government will be cleared in 45 days. “There is no interest waiver for the lockdown period. The conditions for availing PF contribution were not relaxed. It is very difficult to meet the criteria that 90% of employees should get pay of less than Rs 15,000,” he said. “The new definition of MSMEs will lead to confusion as both investment and turnover conditions should be satisfied to keep the status and service sector is combined with manufacturing sector.”
But A Sakthivel, chairman of the Apparel Export Promotion Council (AEPC), welcomed the announcements. “We welcome the decision to disallow global tenders by the government for up to Rs 200 crore. This will boost local industries who otherwise found it difficult to compete with foreign competitors. It will further help in realizing the PM’s dream of making an atmanirbhar (self-reliant) India.”
Published On : 13-05-2020
Source : Times of India