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Wednesday, May 27, 2020

No immediate relief to MSME, grievances ignored in economic package: Industry representatives in Tamil Nadu

Industry representatives in the state said crucial grievances they raised before the finance ministry in earlier petitions were ignored and none of the announcements made today would help MSMEs immediately.

Written by Arun Janardhanan | Chennai | Updated: May 13, 2020 8:59:45 pm
msme sector, finance minister msme sector, small medium industries, economic package, govt economic package, finance minister nirmala sitharaman A tea seller in Chennai wears a mask while a sanitiser bottle is placed on the counter amid a nationwide lockdown (Express Photo)

Even as industries in Tamil Nadu welcomed the government’s announcement of a Rs 3 lakh-crore collateral-free automatic loan  to support to the struggling micro, small and medium enterprises (MSME) sector, confederations of the industry expressed disappointment with the overall economic package, details of which were announced by Finance Minister Nirmala Sitharaman Wednesday,

Tamil Nadu has the most number of industries in the country. Speaking to The Indian Express, industry representatives in the state said crucial grievances they raised before the finance ministry in earlier petitions were ignored and none of the announcements made today would help MSMEs immediately.

“Only relief in the announcement is that all pending payments from the government will be cleared in 45 days. However, the conditions for availing PF contribution are not relaxed. It is also very difficult to have 90% of employees who make less than Rs 15,000 in salary,” S Anburajan, who is heading the apex body of MSMEs in the state, said.

Anburajan said the new definition of MSME will lead to confusion as both the investment and turnover conditions will have to be satisfied to keep the status.

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“What about the unorganised Sector? What about Micro companies where the proprietor and his family members are employees? We had sent many representations and appeals to the ministry but the same have not been considered. We request Prime Minister Narendra Modi to intervene and help MSMEs with suitable relief measures,” he said.

A Shanmugavelayutham, a leader of the Tamil Nadu Small and Tiny Industries Association said a large majority of industries in the state, about 10 lakh, have at least 20 to over 100 workers each. “We haven’t paid wages for April, we are clueless about May as well. Why was the government silent about this crisis? It was disappointing. Isn’t the survival of industries and workers more crucial at this moment?” he asked.

Shanmugavelayutham said that while the MSME sector has welcomed the decision to provide collateral-free automatic loans worth Rs 3 lakh crore, the government is silent about the rate of interest.

Referring to a demand raised by the industries to reduce the interest rate from 10 or above to 6 or 7 percent, Shanmugavelayutham said: “While it was a welcome move to see the Rs 20,000 crore announcement to handle NPA problem, our demand for a Provident Fund (PF) waiver for three months was ignored, instead it was limited to a mere reduction of 2% in the announcement,” he said.

Mohan C K, another leader of Tamil Nadu Small and Tiny Industries Association, which represents about 150 associations representing hundreds of small and micro industrial units across the state, said a crucial demand to use the Employees’ State Insurance (ESI) to pay the workers was also not paid heed.

“The measures taken by the state or central governments, all steps to help the long term future of industries are welcomed. But the need of this hour is for immediate relief for thousands of industries gasping for breath, having all productions and operations stopped, having lost workers and being unable to pay the available work force. These announcements had nothing for an immediate relief. Even if opening up credit is effective, where is the interest waiver for term loans. There is no way out for industries to handle this crisis,” he said.

In a letter written to Sitharaman last month, the Industrial Estate Manufacturers Association in the state had sought immediate relief for the sector to pay wages, electricity charges and the regular bank interests and “mainly bring back our workers and labourers back from their native places who have been trained all these years to work in our factory and workshops and to re-start all the idle machinery all these days due to lockdown.”

Reminding the centre that the MSME sector “was suffering for our concrete revival” even before the lockdown was announced and that “most of the large industries had declared layoffs due to recession in our economy and thereby most of the MSME units had to be closed, unable to meet their day to day commitments,” the letter sent in April said the survival of MSMEs and the significance of their revival is crucial as “entrepreneurs during the times of crisis always will take it as a personal issue”, often selling their jewellery and personal properties to run businesses unlike bigger players.

The letter had further said that banks don’t have to fear about the loans not being recovered from the MSME community as personal properties such as houses, land and jewellery remain with the banks.

The state manufacturers association too had pleaded the Centre to instruct the RBI and all the banks to finance packages for MSME sectors “with a long repayment period of 60 months with at attractive interest rate of 7% for the MSME sector for all types of loans including working capital loans, terms loans, mortgage loans, term loans for machinery etc since all these loans have been given by taking sufficient collateral loans from the entrepreneurs.”

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