VIJAYAWADA: Chief Minister YS Jagan Mohan Reddy on Thursday urged Prime Minister Narendra Modi to lend a helping hand for the revival of the industrial sector in the State that is under severe distress due to the coronavirus pandemic. In a letter to the Prime Minister, he listed a slew of steps to breathe life back into the manufacturing sector including micro, small and medium enterprises (MSMEs), textiles, and auto & auto-components manufacturing, pharmaceuticals, mining sector, and export-oriented businesses.
Pointing out that the industrial sector has been hit hard not only due to trade and export restrictions but also absence of workforce, he explained that MSMEs — the backbone of the industry and service sectors — alone employ more than 11 million people in the State and contribute 7-8% of the State GDP. “94% of MSMEs in the State are locked down, while 6% are operating at 25-30% of full capacity,” he said and suggested that moratorium for all PF, ESI and Gratuity payments by employer for six months may be announced if the employer does not retrench or remove more than 10% of the workforce.
He felt a fund for supporting MSMEs may be created to help them access additional liquidity to meet wage liabilities. Similarly, the Chief Minister said EMIs and interest on working capital may be deferred till normalcy is restored. RBI has already allowed three months deferment but Jagan opined the period could be extended for MSMEs. “Cap the interest chargeable to 7% for the period between March 31 and December 31. Declare 12 months moratorium period on all repayments of MSMEs towards term loans availed from banks, NBFCs and State finance corporations and grant additional ad-hoc sanction of working capital to the tune of 25% of the current sanctioned limit,” the Chief Minister requested, adding that ESIC funds under the Rajiv Gandhi Shramik Kalyan Yojana, Atal Beemit Vyakti Kalyan Yojana may be utilised to pay workers for the lockdown period — considering the period as a national emergency.
The Chief Minister also brought to the notice of the PM that the highest amount of delayed payments to MSMEs are pending from government departments and public sector undertakings despite the deadline for payments being 45 days. He urged the PM to ensure that such delayed payments be released immediately and also see that government departments do not impose penalties for any delays in delivering orders placed by them. The Chief Minister further pointed out that MSMEs which are closed due to the lockdown are facing a huge burden of minimum demand power charges — levied irrespective of the working status of the units. These may be waived, he said, and also requested that the threshold limit of GST compliance eligibility be increased to `100 lakh a year turnover from the current `20 lakh and `40 lakh both for SME and Service sectors.
‘Cut GST rates, allow deferred payments’
“GST payment may be deferred till the business becomes normal. Interest-free GST deferral scheme should be announced for next one year, similar to VAT, IFST facility,” he said. On textiles, he said in Andhra alone, 2.5 lakh people depend on textiles manufacturing. He requested that bank interest rate be reduced and soft loans be extended by banks to the extent of government dues. “Moratorium for repayment of principal and interest amount to banks for four quarters under the RBI loan restructuring scheme given for MSMEs may be extended to all textile units,” the Chief Minister said, adding cotton yarn and fabrics must be included under Rebate of State and Central Taxes and Levies, Interest Equalisation Scheme and Merchandise Exports from India Scheme benefits with immediate effect to save lakhs of jobs.
Stating that closure of China, USA and EU markets has impacted textile exports, Jagan wanted exemption from anti-dumping duty and basic customs duty for all raw materials, dyes and chemicals, intermediaries, spares, accessories etc. “For garment exporters, business losses suffered need to be converted into soft loans and excluded from the existing working capital limit along with support to units for wages payment,” he said.
Explaining the status of the automobile sector, the Chief Minister said Andhra is set to be an automobile hub being home to over 100 component manufacturers and suggested that GST rate cuts be provided for new vehicles and GST payments may be deferred to boost liquidity. “Defer tax payments for 3 months and offer low-interest rates to auto components manufacturers in the SME sector and extend BS-VI deadline by six months,” he said.
On the pharma sector, he said there are more than 192 firms in the State and felt that in the short-term, API may be declared as a strategic sector as most inputs are imported. Relax rules on the restriction of export of APIs with sufficient inventory and ensure faster reimbursement of GST and other levies,” he suggested and said in the medium term, a list of key APIs that India needs to manufacture may be approved. For the metals and mining sector, the Chief Minister requested that funds for projects under the National Infrastructure Pipeline may be released immediately.
He also sought stimulus/revival packages for strategic sectors such as Real Estate, subsuming of all levies into GST, relaxation in statutory and employee-related payments and moratorium for loan repayment. He felt wage subsidies for labour-intensive mining projects must be granted in the short-term. Food processing sector, which is a major one in Andhra, he sought increased availability of working capital through special loans, deferment of GST, electricity charges and duties and short-term collateral-free loans. For exporters, he sought interest-free working capital term loans to cover the cost of wages, rent and utilities and waiver from paying EPFO and ESIC funds for three months from March to May besides additional duty drawback of at least 2% on all exports made during the period April 1 and September 30, 2020.