Lok Sabha Question No. 4376 (UNSTARRED), answered on 2025-03-27
Subject: Financial Challenges to MSMEs
Ministry: MICRO, SMALL AND MEDIUM ENTERPRISES
Asked by: Shri Kodikunnil Suresh

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

## LOK SABHA UNSTARRED QUESTION NO. 4376 TO BE ANSWERED ON 27.03.2025

## FINANCIAL CHALLENGES TO MSMEs

## 4376. SHRI KODIKUNNIL SURESH:

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

- (a) whether the Government is aware of the issues relating to delay in payments to Micro, Small and  Medium  Enterprises  (MSMEs)  which  significantly  affects  their  cash  flow  and  operational sustainability;
- (b) if so, the specific measures taken/plans to take to ensure timely payments to MSMEs and to hold larger firms accountable for such delays;
- (c) whether  there  has  been  an  assessment  of  the  financial  support  provided  to  MSMEs  postCOVID  and  the  extent  to  which  these  measures  have  effectively  addressed  their  needs  and challenges;
- (d) the  expected  timeline  for  the  implementation  of  any  additional  support  measures  aimed  at aiding MSMEs in recovering from the economic impact of the Pandemic; and
- (e) whether  the  Government  has  consulted  MSME  stakeholders,  industry  associations  and entrepreneurs to understand their concerns and gather input on improving support mechanisms and if so, the details thereof?

## ANSWER

## MINISTER OF STATE FOR MICRO, SMALL AND MEDIUM ENTERPRISES (SUSHRI SHOBHA KARANDLAJE)

(a) and (b): The Government of India has taken a number of steps and initiatives to ensure timely payment settlements for Micro and Small Enterprises (MSEs) across the country. Some of them are as follows:

- i. 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). So far, 161 MSEFCs have been set up, with more than one MSEFC set up in Delhi, Jammu & Kashmir,  Karnataka,  Kerala,  Maharashtra,  Punjab,  Rajasthan,  Tamil  Nadu,  Telangana,  Uttar Pradesh and West Bengal.
- ii. Ministry of MSME launched SAMADHAAN Portal on 30.10.2017 (http://samadhaan.msme.gov.in/MyMSME/MSEFC/  MSEFCWelcomer.aspx.)  for  monitoring of the outstanding dues to the MSEs from the buyers of goods and services.
- iii. 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.
- iv. Government  of  India  vide  notification  S.O.  4845(E)  dated  07.11.2024  has  also  instructed CPSEs and all companies with the turnover of Rs. 250 Crore or more to get themselves onboarded  on  the  Trade  Receivables  Discounting  System  (TReDS),  an  electronic  platform  for facilitating the discounting of trade receivables of MSMEs through multiple financiers.

- v. Section 43B (h) of the Income-tax Act 1961 provides that any sum payable by the assessee to an MSE beyond the time limit specified in section 15 of the MSMED Act 2006, which cannot be more than 45 days, shall be allowed as a deduction only on actual payment.

(c) to (e): The Government of India has announced a series of measures under Aatma Nirbhar Bharat to support the economy, especially the MSME sector in view of Covid-19. These measures inter-alia includes:

- i. New revised criteria for classification of MSMEs.
- ii. Registration of MSMEs through 'Udyam Registration' for Ease of Doing Business.
- iii. Rs. 50,000 crore equity infusion through Self Reliant India Fund (SRI Fund).
- iv. No global tenders for procurement up to Rs. 200 crores, this will help MSME.
- v. Implementation of Rs. 5 lakh crore Emergency Credit Line Guarantee Scheme (ECLGS), for businesses, including MSMEs. The Scheme was operational till 31.03.2023.

As per a research report dated 23.01.2023 of the State Bank of India on ECLGS, almost 14.6 lakh MSME accounts, of which about 93.8% of the accounts were MSEs, were saved.

Further, Ministry of Micro, Small and Medium Enterprises vide its notification S.O. 4926 (E) dated 18.10.2022 has notified that in case of an upward change in terms of investment in plant and machinery  or  equipment  or  turnover  or  both,  and  consequent  re-classification,  an  enterprise  shall continue to avail of all non-tax benefits of the category (micro or small or medium) it was in before the re-classification, for a period of three years from the date of such upward change.

Consultation with MSME stakeholders, industry associations and entrepreneurs to understand their concern and seeking inputs is a continuous process undertaken by the Government which helps in recognizing the issues and challenges being faced by the Micro, Small and Medium Enterprises and to address them suitably.

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