“It is not about shutting operations for one day or 10 days or 21 days. It is the uncertainty that is killing us,” said the owner of a machine tool manufacturing company.
A majority of MSME owners that BusinessLine spoke to seemed clueless about what next.
“We invested quite a sum two years back when the market was good. Now, we do not have money to pay GST and other statutory dues. The future looks uncertain,” said S Soundararajan, Director, Falcon Toolings, adding “still wondering if the market will be stable even after six months.”
He was not alone. Industrialists by and large said that the customer expectations had started to increase and they would have to rethink the supply chain.
“The fear psychosis is keeping people indoors. We will need to wait and watch the repercussions and see how the government would handhold the economy after the 21-day lockdown. We are in the capital equipment line of business. With capex investments taking a hit, our business too will be impacted badly,” he said.
R Ramamurthy, President of the Coimbatore District Small Scale Industries Association (Codissia), said servicing debt could be the biggest challenge for the MSMEs in the coming days. “We welcome the timely relaxation (announcement by RBI) of three-month moratorium on all loans and the 100 basis point cut in cash reserve ratio. But the government should ensure that all banks follow the deferment. Invariably, when schemes are announced, except a few, the rest of the players in the banking industry maintain that they have not received any such communication from their HO.”
While appealing to the Centre to extend adhoc additional credit of 25 per cent on working capital by all financial institutions, the association has requested that interest be kept nil during the lockdown period and until the MSME units resume operations.
“Mathematical waiver of interest by banks up to June 30 would only have an insignificant impact on the effective interest rate if worked retrospectively from commencement of loan,” the Codissia President said.
Codissia has sought time extension for payment of insurance premium, grant of subsidy to enable MSME units pay wages to its employees, stimulus package (funds) to employees for the lockdown period and a package to the units for loss in business during this period and waiver of interest on payment of stautory dues like PF, ESI, EPF, GST and income tax among others.
The Government should consider extension of existing foreign trade policy (2015-20) for one year beyond March 31, 2020, extension of all status holder certification and extension of reintroduction of interest equalisation scheme to help the community at the time of crisis, Ramamurthy said.