Goods worth hundreds of crores stuck in factories; MSMEs complain Centre, states not on same page

KEY HIGHLIGHTS:

• Industry body FISME has told government that goods worth hundreds of crores are lying uninspected at factories
• Representing 740 MSME associations, the industry chamber has noted that Centre and states don't seem to be on same page when it comes to helping the industry
• Government spending was front loaded, but delay in testing and inspection has negated part of the positive impact envisaged for the industry 
• MSMEs are the worst affected due to the pandemic with a majority of them facing cash flow issues and weak demand

Frustrated over varied quarantine rules in different states and lack of public transport, Federation of Indian Micro, Small and Medium Enterprises (FISME) has told government that goods worth hundreds of crores are lying uninspected at factories, choking their finances.

The industry body representing 740 MSME associations also noted that Centre and states don't seem to be on same page when it comes to helping the industry.

"It was recommended that in order to ease liquidity the performance guarantee money would be released to the extent of work completed. But states are not following it," FISME Secretary General Anil Bhardwaj said.

Narrating his ordeal, Dinesh Singhal, Managing Director of Kanohar Electricals Ltd said that supplies worth Rs 10 crore remain stuck in the factory as the buying agency has failed to inspect them and give clearance for dispatch.

Industry executives said that high-value capital goods supply agreements generally have clause of inspection before their dispatch to the concerned buyer.

"Certain items have to be tested in designated lab in Karnataka but due to quarantine rules there is significant delays," said Singhal who supplies transformers to various state power utilities.

Notably, there are only a few nationally recognised labs and many of them are located in states with strict quarantine rules.

VK Aggarwal, Managing Director of Shashi Cables, a Lucknow-based medium enterprise concurred with Singhal but said that some of the central power companies like Power Grid and BHEL had been carrying out the inspection online.

Flagging various issues faced by the industry, FISME has said that government spending was front loaded, but delay in testing and inspection has negated part of the positive impact envisaged for small and medium firms.

The industry body also flagged the issue of suspending custom operations at ports after reports of coronavirus cases.

"There are several reports that once a Covid case is reported at a (Custom) station, the functioning is seized for days together. The hapless importers/exporters have to bear the brunt by way of penalties. There is a need to put in place SOPs to ensure uninterrupted functioning," FISME has said.  

MSMEs have been one of the worst affected from the pandemic with a majority of them facing cash flow issues and weak demand. The government in May announced Rs 3 lakh crore emergency credit at concessional rate to help them survive the slowdown. 

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