The Confederation of Indian Industry (CII) has announced setting up of a CII COVID Rehabilitation and Relief Fund (CRR) to assist small enterprises or MSME in rehabilitation. This decision was taken by a CII Forum on Covid-19, which is leading industry response measures to the Corona virus pandemic.

Following widespread discussions with MSME members across the country, specific measures have been suggested by CII to curtail the impact of Corona virus on the MSME sector. “Multiple actions need to be taken on the extension of bank loans, a special fund, steps regarding the filing of GST and improving the welfare of workers. CII stands ready to support the MSME sector in this hour of need through the CII COVID Rehabilitation and Relief Fund,” said Shreekant Somany, Chairman, CII National Council on MSME.

With MSMEs facing a cash crunch, CII requested for additional ad-hoc sanction of working capital to the tune of 25% of sanctioned limit as a relief measure. The industry body suggested deferment of EMIs and interest rate on working capital as well. Setting up of a special MSME Factoring fund to enable MSMEs to discount their bills to approved retailers in 15 days and permit retailers to pay in 120 days would help in faster realization, said CII.

Creation of a corpus by the Government to help MSMEs tide over the crisis would help them to pay wages, according to CII. Extension of NPA norms in genuine cases to 150 days from the present 90 days and if required by industry, ad-hoc limits to an extent of 25% of sanctioned limits may be allowed by banks on SoS basis to overcome temporary liquidity crunch, would also provide temporary relief, said CII.

Measures for improving the welfare of MSME workers during the temporary shutdown period are required as well, said CII. Some of these could include the following:

• Supporting laid-off workers during the crisis period
• Handling statutory compliance of compensating workers in case of the shutdown
• Exploring insurance cover options through the Employee State Insurance Corporation (ESIC)
• 90 days extension for payment of Employer’s contribution of PF and ESIS
• Insurance cover or part financing wages for those laid off due to Corona Virus through ESIC or new government schemes
• Sllowing of  CSR funds to support payment of wages to laid off Workers

Other measures such as extension of period for declaring NPAs by MSMEs, allowing rollover of terms loans and implementation of moratorium on EMIs for industrial loans and faster tax refunds, allowing banks to extend credit limit for MSMEs by 20% at branch level, among others could significantly ease liquidity and other pressures on the sector and help the sector cope with the current crisis, said CII.

It has been further proposed by CII that the Government should draw up contingency plans for three periods – Till 31 March; for Next 2 months till 31 May and then for Next 2 months till 31 July. There should be close monitoring of Payment Delays by CPSUs to MSMEs through a portal for complaints and necessary funds are provided and utilized for this purpose should be ensured; banks should be allowed to extend existing Credit Limits for MSMEs by 20% at Branch Level.

Relief should be provided so that credit rating of Brands and Retailers is not adversely affected due to delays in repayment of bank loans, interest, EMI, etc together with ensuring that no punitive action is taken by NCLT for delays of repayments, etc. till 31st December 2020, added CII.

CII has 67% of its membership as SME and works closely with the Ministry of MSME. CII organized a special virtual meeting for its SME members on assessing the impact of Covid-19 in their businesses and also bring out suggestions to mitigate the adverse impact. Over 100 MSME members from across India participated, representing sectors like auto components, light engineering, forging, electronics, ceramics, construction equipment, décor solutions, financial services, pharmaceuticals, chemicals, IT & ITeS, etc.