Union minister Nitin Gadkari on Thursday said micro, small and medium enterprises sector is on the verge of collapse and urged major industries to release the outstanding dues to such companies within a month.
He said the position of MSMEs was “worst” as they were now engaged in a “battle for their survival”.
The minister also noted that the pendency of dues owed to MSME units by the central government, state governments, public sector undertakings and major industries was “very high”.
“My request to all of you, as members of major industries, if it is possible for you to at any cost release the payment within a month. Don’t take more time than that otherwise the situation is very bad,” the MSME minister said in an interaction via video-conference with the members of SIAM Institute.
“But still if anywhere you have a problem, please be positive about this sector, because this is really on the verge of collapse. Now it is a very important thing if you can help them, within a month if you can give their payment it will be good,” Gadkari said.
The minister said he was trying to introduce a scheme envisaging setting up of a “rolling fund” where the interest cost on the payments due to MSMEs shall be borne either by the supplier or the purchasing industry.
Gadkari said the “rolling fund will be helpful for MSMEs to get their working capital”.
Last month, the minister had said the government will set up a Rs 1 lakh crore fund to repay outstanding payments to MSMEs owed by the central and state government undertakings as well as major industries.
Gadkari had said he has devised a scheme to set up the fund, and the proposal may be placed before the Cabinet for approval once the finance ministry gives its go-ahead.
“We have decided to set up a fund of Rs 1 lakh crore. We will insure this fund with the government paying the premium. We will come up with a formula for sharing of the interest burden between the paying entity and payment-receiving entity and banks against this fund, for the payments due to MSMEs which are stuck with the PSUs, centre and state governments and major industries,” Gadkari had said.