Small and Medium Enterprises (SMEs) from Tamil Nadu, Andhra Pradesh, Karnataka and Kerala are crying for the Centre’s attention to help address the various operational challenges that the sector is facing. Key officials from all four States met in Chennai and said that the industry would have to wind up and incur heavy losses if the government did not address their problems.
C.Babu, president of Tamil Nadu Small and Tiny Industries Association, said, “We will be submitting all our requests to the Prime Minister soon.” According to him, the foremost challenge for the sector is from the banks. “We request that the term loan repayment period should be extended for 10 years for machinery and 15 years for plant and machinery. Transaction charges should be reduced and timely funding should be provided,” Mr. Babu said.
Many SMEs across the four States said that there should be a differentiation between wilful defaulters and non-performing assets (NPAs). “The government should withdraw the Sarfaesi Act or atleast exempt units which have taken loan up to ₹2 crore with immediate effect,” added Mr. Babu. Currently, the Sarfaesi Act empowers bank and financial institutions to recover their NPAs without the intervention of the court. It also provides three alternative methods for recovery of NPAs.
The SMEs lamented that after declaring NPA only 60 days notice is given for them to settle dues which the industry feels is not possible. After that the units are put on auction. “It would be viable if the notice period is 180 days. Further, entrepreneurs should be allowed to sell their collateral on their own and settle bank dues instead of banks putting them in auction,” Mr. Babu said.
Difficult period
The last three years have been difficult for MSMEs in Tamil Nadu. In 2015, the industry incurred huge losses due to the floods, in 2016 cyclone Vardah dampened their businesses, and GST had a huge impact in 2017. “We are also requesting the SME sector to be included as a beneficiary in the National Disaster Mitigation Fund (NDMF). No relief was given to us from the NDMF,” Mr. Babu said.
A.P.K. Reddy, national president of Federation of Small and Medium Enterprises of India, said job workers should be exempted from GST and a simple return filing system should be introduced for a turnover of up to ₹25 crore. Mr. Reddy said the Centre should help since there is increased competition now, unlike in the past.
