CHENNAI: After the Union government budget fell short of the expectations of Micro, Small, and Medium Enterprises in the State, the sector is pinning all its hopes on the State budget.
KV Kanakambaram, President of The Industrial Estate Manufacturers Association, said that 98 per cent of Indian MSME’s, including those in Tamil Nadu, are functioning on loans and cash credits borrowed from public, private sector banks, and Non-Banking Financial Companies (NBFCs), which also provided ‘Covid’ loans.
Kanakambaram had attended a high-level meeting of State government seeking recommendations from MSMEs to bring out the White Paper.
“Now, the issue is that neither the Union finance ministry nor the Reserve Bank of India consider the fact that such timely financial assistance has not been backed by the common sense of providing extension of the existing repayment tenure and relaxation of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, (SARFAESI Act) 2002, from demoting Covid lockdown impacted units as a Non-Performing Asset (NPA),” said Kanakambaram.
Fearing confiscation of properties pledged as security to avail loans, the MSMEs want the State to intervene. “The State government should ensure that these financial institutions should not act against the MSME units under the pretext of NPA without intimating the State’s ministries of finance, industries, and labour for a period of five years. There have been similar implementations by the Andhra Pradesh government,” said Kanakambaram.
Other recommendations put forth by MSMEs during the meeting was strengthening State-run NBFC’s such as Tamil Nadu Industrial Investment Corporation Limited, established for the sole purpose of assisting MSME’s. The emphasis is to provide more powers to such NBFC’s to come forward voluntarily and aid industries at the taluk level, even by obtaining international financial aid at low interest rates. V S Narasimhan, President of Small Industries Management Association and former president of Tamil Nadu Small and Tiny Industries Association, said that the State government should float its Credit Guarantee Corporation with a large capital to rescue sick small-scale industries.
The S Anburajan, President of Tamil Nadu Small and Tiny Industries Association, which is the apex body of MSME associations of the State, said that micro and small industries are looking for loan waiver rather than the loans.
“We have urged the government to ask the banks to waive loans taken during the pandemic,” he said. It is learnt that the MSME sector is also looking at the implementation of Chennai Kanniyakumari Industrial Corridor, part of India’s East Coast Economic Corridor stretching from West Bengal to TN.