Lok Sabha Question No. 564 (UNSTARRED), answered on 2024-07-25
Subject: Payment Issues to MSMEs
Ministry: MICRO, SMALL AND MEDIUM ENTERPRISES
Asked by: Thiru Dr. S Jagathratchakan, Dr. Amar Singh

## GOVERNMENT OF INDIA MINISTRY OF MICRO, SMALL AND MEDIUM ENTERPRISES

## LOK SABHA UNSTARRED QUESTION NO. 564 TO BE ANSWERED ON 25.07.2024

## PAYMENT ISSUES TO MSMEs

564. SHRI S JAGATHRATCHAKAN: DR. AMAR SINGH:

Will the Minister of MICRO, SMALL AND MEDIUM ENTERPRISES be pleased to state:

- (a) whether lack of finance is crushing the growth prospects of MSMEs and if so, the reaction of the Government thereto;
- (b) whether the Government is cognizant that one of the long-plaguing problems of Micro, Small and Medium Enterprises (MSMEs) is untimely payments leading to choked cash flows; and
- (c) if so, the total payment of funds delayed to MSMEs annually and the details of the initiatives proposed to be taken by the Government to resolve this problem?

## ANSWER

## MINISTER OF MICRO, SMALL AND MEDIUM ENTERPRISES (SHRI JITAN RAM MANJHI)

- (a): Lack of finance adversely affects the growth prospects of MSME sector. The Government has taken a number of steps to address issue of lack of finance by MSMEs. Some of the steps are as given below:
-  Collateral  free  loan  up  to  a  limit  of  Rs.  500  lakh  (w.e.f.  01.04.2023)  to  Micro  and  Small Enterprises with guarantee coverage up to 85 % for various categories of loan through Credit Guarantee  Fund  Trust  for  Micro  and  Small  Enterprises  (CGTMSE)  under  Credit  Guarantee Scheme.  Since  inception  i.e.  FY  2000-01  till  30.06.2024,  a  total  of  91,76,248  guarantees amounting to Rs 6,78,326.81 crore  have been issued.
-  Further, under Prime Minister's Employment Generation Programme, credit linked subsidy for setting up new micro-enterprise in non-farm sector is provided. Margin Money subsidy ranging from  15%  to  35%  of  the  project  cost  is  provided.  For  beneficiaries  belonging  to  Special categories,  including  women,  the  margin  money  subsidy  is  35%  in  rural  areas  and  25%  in urban areas. Since inception i.e., FY 2008-09, more than 9.69 lakh micro enterprises have been assisted with Margin Money subsidy of more than Rs 25,500 crore providing employment to an estimated 79 lakh persons.

(b) & (c): Ministry of MSME launched a portal viz. SAMADHAAN Portal (https://samadhaan.msme.gov.in/MyMsme/MSEFC/MSEFC\_Welcome.aspx ) for filing of grievances & for monitoring of the outstanding dues to the Micro & Small Enterprises (MSEs) from the buyers of goods  and  services  on  30.10.2017.  As  per  the  information  available  on  the  SAMADHAAN  Portal since  inception  on  30.10.2017  till  22.07.2024,  the  amount  involved  in  pending  applications  is  Rs. 21,583.7 crore. The year-wise details are as follows:

| SI. No.   | Year                    | Total Pending(Applications+ Cases)   | Pending Amount(Applications+ Cases) (Rs. Crore)   |
|-----------|-------------------------|--------------------------------------|---------------------------------------------------|
| 1.        | 31.10.2017 - 31.03.2018 | 642                                  | 132.27                                            |
| 2.        | 2018-2019               | 1,662                                | 650.44                                            |
| 3.        | 2019-2020               | 4,389                                | 1,931.03                                          |
| 4.        | 2020-2021               | 9,092                                | 3,562.74                                          |
| 5.        | 2021-2022               | 13,228                               | 3,681.18                                          |
| 6.        | 2022-2023               | 14,902                               | 3,746.11                                          |
| 7.        | 2023-2024               | 31,194                               | 5,335.20                                          |
| 8.        | 01.04.2024-22.07.2024   | 14,701                               | 2,544.73                                          |
| Total     | Total                   | 89,810                               | 21,583.7                                          |

The following initiatives have been taken by the Government to address the issue:

-  Under the provisions of the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006,  Micro  &  Small  Enterprises  Facilitation  Councils  (MSEFCs)  have  been  set  up  in  the States/UTs to deal with cases of delayed payments of the Micro and Small Enterprises (MSEs).
-  The Ministry of MSME has requested States/UTs to set up more number of MSEFCs for quicker disposal of cases related to delayed payments. So far, 159 MSEFCs have been set up, with more than  one  MSEFC  set  up  in  States  like  Delhi,  Jammu  &  Kashmir,  Karnataka,  Kerala, Maharashtra, Punjab, Rajasthan, Tamil Nadu, Telangana, Uttar Pradesh and West Bengal.
-  The Ministry of MSME created a special sub-portal within  Samadhaan  Portal on 14.06.2020, after the Aatma Nirbhar Bharat announcements, for reporting the dues and monthly payments by Central Ministries/Department/Public Sector Enterprises to MSMEs.
-  Government of India has also instructed CPSEs and all companies with the turnover of Rs. 500 Crore or more to get themselves on-boarded on the Trade Receivables Discounting System, an electronic  platform  for  facilitating  the  discounting  of  trade  receivables  of  MSMEs  through multiple financiers.
-  Companies which get supplies of goods or services from Micro & Small Enterprises and whose payment to Micro and Small Enterprises exceeds 45 days from the date of acceptance or the date of deemed acceptance of the goods or services, also need to submit a half yearly return to the Ministry of Corporate Affairs stating the amount of payments due and the reasons of the delay.

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