In the last one month, COVID-19 has literally wiped out the present and future plans of micro, small and medium enterprises (MSMEs) and they have to be provided hand holding to emerge successful, said the All India Manufacturers’ Organisation (AIMO).
MSMEs face two operational issues viz. working capital and cash flow. To tackle them, the government should release all the payments due to them immediately. These include Goods and Services Tax refunds and tax-deducted-at-source refunds. The units must be allowed to defer payments such as GST, EMIs, interest etc. by six months, said K.E. Raghunathan, past national president, AIMO.
“COVID-19 not only killed their (MSMEs) plans but also their dependence upon large scale industries and the government. Right now, MSMEs are struggling as they are not aware on how to restart business once normalcy returns,” he said.
ADVERTISEMENT
According to him, MSMEs would face problems concerning employees, private parties and the government due to the lockdown.
In the case of employees, the issues would relate to payment of salary, lodging and boarding of migrant workers and lack of adequate staff when they when operations resume. Issues concerning private parties would relate to payment of rent, collection of dues, payments to suppliers, banks and EMIs on loans for loans taken.
MSMEs would also face problems in paying electricity bills and filing of statutory returns.
ADVERTISEMENT
He said most of the MSME owners had simply abandoned their units without proper shutdown of machines, storage of raw materials and completion of service obligations, among other things. They will face their biggest challenges at the time of reopening, in the form of cash flow management, restarting machines, staffing and raw material issues, order book and servicing of existing loans. Hence, they should be provided hand holding, he added.