Why is there no Samadhaan for delayed payment to MSMEs

Asia's Tech News Daily

#delayed payment, #India, #MSME, #MSME dues, #MSME Samadhaan

Representative Image (Source: ShutterStock)

Just as the pandemic was about to wreak havoc, businessman Raman Mehta who runs Diamonds Ceilings, a ceiling tiles manufacturing unit in Manesar, filed a complaint with the Micro and Small Enterprise Facilitation Council (MSFC) in Panchkula, Haryana, seeking its intervention to recover pending payments from clients. It’s been 20 months since then, and he is nowhere close to recovering the dues.

Mehta is not alone. Thousands of small businesses across the country are suffering, hurt by delays in payment for goods they have delivered. Only a fraction of these businesses have approached facilitation councils hoping for an early settlement of their payment.

According to the MSME Samadhaan portal, a portal to monitor delayed payments to MSME units, an estimated 97,359 cases involving a sum of Rs 25,553 crore have been filed by small businesses over delayed payments since its inception in October 2017. Of these, 18,072 cases were filed against government ministries and departments to recover Rs 11,202 crore.

“This was my first experience with filing a complaint. I would give the state council a benefit of doubt in terms of the time they are taking because I filed the complaint during the Covid-19 period in March last year,” Mehta told Moneycontrol.

The first hearing of the case happened this year, nearly a year after he filed the complaint. So far there have been three hearings, including one with the arbitrator. Significantly, the defaulter did not show up at any of the hearings.

“It is frustrating because the defaulter will never show up for hearings. There is a lacuna in the system which should be fixed at the earliest. There should be some form of penalty for not attending the hearings,” he said.

The Micro and Small Enterprise Facilitation Councils (MSEFC) have been set up in the states for settlement of disputes arising out of delayed payments to micro and small enterprises by government departments, ministries, central and state public sector enterprises, proprietors among others. The states were required to set up these councils under the Micro, Small and Medium Enterprise Development (MSMED) Act, 2006.

MSMEs that face more than 45 days’ delay in payment can approach MSEFCs in their state to fast-track the settlement of dues. Complaints can also be filed with the MSEFCs through the Samadhaan portal. Once the case is referred to a state MSEFC, a decision is required to be made within 90 days.

However, a settlement within 90 days rarely happens.

R Ramamurthy, a member of the All India Council of Associations of MSMEs, a body that represents 170 MSME associations across the country, said, “Although the Micro, Small and Medium Enterprise Development Act, 2006, provides that buyers should make payments to MSMEs within 45 days, this is not honoured by most entities.” Delays in payments to MSMEs blocks their working capital, affects the overall business cycle and poses liquidity challenges, he explained.

The Act stipulates that payment for the supply made by an MSME should be mandatorily cleared by the buyer within the outer limit of 45 days from the date of acceptance or deemed acceptance of the supply unless agreed otherwise by the parties. Payment delays attract compound interest with monthly rests on the defaulter at three times the bank rate notified by the Reserve Bank of India.

However, there are several loopholes in the system that ultimately favour the defaulters to get away without making the payments, the associations’ representatives said. 

“There are just so many flaws in that Act. I do not understand why it has not been amended yet. The buyer will just never attend the hearings and keep pushing the case for years because there is simply no penalty for doing that.” Even when the arbitration goes in the favour of an MSME to collect the dues, the business is forced to approach a local civil court to collect its dues.

“It then becomes a civil case. It may then take up to 10 years to recover the dues because the civil court is also very slow,” he added.

Often buyers hold back payments claiming that the quality supplies were poor, several industry associations said.

Many MSMEs do not even file a case because the bargaining power is so poor, they just fear that they will get caught in the system and lose a buyer,” said DP Goel, co-chairman of the MSME Committee at the PHD Chamber of Commerce.

Currently, an estimated 27,186 cases are under consideration in the state facilitation councils.

Mukesh Mohan Gupta, chairman of the Chamber of Indian Micro Small and Medium Enterprises said, “If a buyer has decided that they will not make the payment, then they will simply not pay. The present law is very weak to ensure justice.”

“Whenever an aggrieved MSME approaches the state council, it takes at least two months for the first hearing on it, then a notice is issued to both the parties where again a time of two months is given to both to settle it. Then it is referred to the arbitrator where again a time of three months is given to them for hearing but the buyers simply do not care to come for the hearing.”

Internet Explorer Channel Network
Asia's Tech News Daily
News Related

OTHER NEWS

Louis Vuitton closing its outlets in duty-free shops in S. Korea

Photo by: Llibert Losada/Unsplash Louis Vuitton is pulling out its stores in downtown duty-free shops in South Korea. It was revealed that the French luxury brand is closing its shops ... Read more »

Yandex, KT Corporation to launch robotic couriers in Seoul

South Korea is the first East Asian market where Yandex autonomous delivery robots will start operating Read more »

Budget 2022 | General government deficit to ease to 9.3% of GDP in FY23

Representative image The COVID-19 pandemic took a huge toll on government finances in FY2021. While a modest correction was attempted in FY2022, ICRA expects the Government of India’s (GoI’s) fiscal ... Read more »

Bhagwant Mann is Aam Aadmi Party's CM face for Punjab Assembly polls, announces Arvind Kejriwal

Bhagwant Mann will be aap’S Chief Ministerial candidate for the upcoming Punjab assembly polls. The Aam Aadmi Party (AAP), on January 18, said that its two-time Member of Parliament (MP) ... Read more »

Paytm's first investor expresses confidence in startup even as others feel party's over for the super app

Two months after Paytm sank on its first trading day following India’s biggest initial public offering, co-head of an early investor remains confident in the digital payments startup expressing zero ... Read more »

Toyota needs to build 1 million cars in March to reach annual target

Toyota Motor Corp will build 700,000 vehicles globally in February, up 10% on the year, but will still need to make a million more in March in order to reach ... Read more »

Priyanka Gandhi Vadra slams Yogi govt, urges youth to stick to agenda of employment, education in polls

Priyanka Gandhi Vadra Congress leader Priyanka Gandhi Vadra on Tuesday attacked the Yogi Adityanath government in Uttar Pradesh over the issues of employment and education, and urged the youth to ... Read more »

Asahi Super Dry is changing its beer recipe for the first time in over three decades

Photo by: Bob Jansen/Unsplash Asahi Super Dry Beer is Japan’s no. 1 and best-selling beer, and now the brewery is reformulating its recipe for the first time in 35 years. ... Read more »

Indonesia removes ban on foreign arrivals for recovery boost

FILE PHOTO: Travellers wearing protective suits are seen at the Soekarno Hatta International airport, as the country bans the arrival of travellers who have been in eight African countries to ... Read more »

Bank of Japan lifts inflation forecast, no policy change

Japan’s central bank has revised up its inflation forecast TOKYO – Japan's central bank revised its inflation forecast on Tuesday and adjusted its view of price risks, while leaving its ... Read more »

Tesla in India | States inviting Tesla to set up EV manufacturing plants

A number of Indian states have rolled out the red carpet for Elon Musk’s American electric vehicle company, Tesla, after he told a netizen that Tesla is facing challenges in ... Read more »

Buy GNA Axles: target of Rs 720: Sharekhan

Sharekhan’s research report on GNA Axles Q3FY2022 results were below expectations, marred by weak class-8 truck sales and muted growth in domestic tractors. While remaining positive on the company’s growth ... Read more »

Ducati Streetfighter V4 Review: Firing on all cylinders

There aren’t too many petrol cars in India that produce 200 hp. One of the cars that does is the Mahindra XUV700, which weighs two tonnes and still accelerates at a ... Read more »

Toyota to produce 700,000 vehicles in February

Toyota Motor Corp will build 700,000 cars globally in February, up 10% on the year, but leaving a million vehicles to be made in March if the world’s biggest carmaker ... Read more »

Renting in the free sector is rising again

“The increase is not surprising,” says Jasper de Groot, director of Pararius. “The demand is very high, and the supply is low. Then the prices rise.” The demand for rental ... Read more »

Pandemic severely dented consumer confidence in India: RBI Bulletin

Representative image. The pandemic severely dented consumer confidence in India, with sentiments of households across strata influenced by the spread of infections and fatalities, according to the January Reserve Bank ... Read more »

Hero MotoCorp stake in Ather energy to go up by 1-3% post its Rs 420 crore investment

Representative Image Hero MotoCorp’s stake in electric two-wheeler maker, Ather Energy is likely to go up by 1-3 % as a result of the company’s further investment in the EV ... Read more »

Renting in the free sector is rapidly becoming more expensive, according to Pararius

Photo: ANP In at least eleven years it has not been as expensive to rent a home in the free sector as it has been in recent months. This is ... Read more »

Nesco promoter buys a bungalow in Mumbai for Rs 93 crore

Representative image The promoter of diversified firm Nesco, who is also a director of Chandler & Price (India) Pvt Ltd, has bought a bungalow for Rs 93 crore in the ... Read more »

Is Ola Electric halting production of the S1 scooter?

For those who simply want to purchase the lighter and cheaper S1 without the option of upgrading its features, you’re going to have to wait a lot longer till the ... Read more »

China must put even more electric cars on the roads at a faster rate to meet nation's 2060 carbon neutral target, Greenpeace says

Manufacturers and policymakers in China must work together to put even more zero-emission vehicles on the roads of the world’s largest vehicle market to meet the nation’s carbon neutrality target ... Read more »

Records show Bihar doctor took 5 COVID-19 vaccine shots, probe ordered

Representative image The Bihar government has ordered an investigation after records showed that a Patna-based civil surgeon was administered five shots of the COVID-19 vaccine. The civil surgeon, Dr Vibha ... Read more »

Margins will come under control in the next 2-3 quarters: HCL Tech CEO C Vijayakumar

Read more »

PM Modi is incarnation of God like Lord Ram and Lord Krishna born to end despair: MP minister

PM Narendra Modi (File image) Madhya Pradesh Agriculture Minister and BJP leader Kamal Patel termed Prime Minister Narendra Modi an “incarnation of God”, saying he was born to end the ... Read more »

Omicron wave might be over as quickly as it began, says new report

According to a new report from SBI, India’s Omicron wave may hit its peak in the next couple of weeks as cities deal better with the outbreak. With Mumbai already ... Read more »

20% fall in January bookings due to COVID-19 forces railways to cancel several train services

[Representative image: AP] Indian Railways has begun to cancel several train operations due to low occupancy, with a 20 percent fall in passenger bookings in January and rising cases of ... Read more »

G.O.A.T Brand Labs acquires The Label Life, a westernwear brand

G.O.A.T Brand Labs has taken a majority stake in The Label Life, a women’s fashion and lifestyle brand.  Founded by Preeta Sukhtankar, along with Yashika Punjabee and Sonam Shah, six ... Read more »

Dixon Tech enters into JV with makers of boAt brand Imagine Marketing

Homegrown contract manufacturer Dixon has entered into an equal joint venture with makers of boAt brand of electronics, Imagine Marketing, to undertake design and manufacturing of wireless audio solutions in ... Read more »

RBI imposes monetary penalty on The Co-operative Bank of Rajkot

The Reserve Bank of India (RBI) on January 17 imposed a monetary penalty of Rs 4 lakh on The Co-operative Bank of Rajkot, Gujarat for violation of certain norms. This action ... Read more »

Maruti Suzuki share price falls after global brokerage retains 'sell', expects 25% downside

Maruti Suzuki India share price fell over 2 percent in the morning session on January 18 after CLSA retained sell call on the stock. The scrip was trading at Rs ... Read more »

Race to cut carbon emissions splits U.S. states on nuclear

The Associated PressChris Levesque, president and CEO of TerraPower, a company developing and building small nuclear reactors, poses for a photo in the company’s lobby, Thursday, Jan. 13, 2022, in ... Read more »

Norway's Telenor to sell stake in Myanmar's Wave Money

The Associated PressFILE – In this Oct. 26, 2014, file photo, customers including Buddhist monk line up outside a showroom to buy SIM card at Telenor, Norwegian telecommunication company, in ... Read more »

Job instability, medical costs key concerns in COVID times: SBI Life study

(Image: ANI) Even as the third COVID-19 wave takes root in India, many are still reeling under the impact of the first two waves in 2020 and 2021, though there ... Read more »

Sudarshan Chemicals Q3 PAT seen up 6.5% YoY to Rs 36 cr: Sharekhan

Sudarshan Chemical Industries | Company reported profit at Rs 30.33 crore in Q2FY21 against Rs 46.2 crore, revenue rose to Rs 428.9 crore from Rs 424.85 crore YoY. (Image: Moneycontrol) ... Read more »

Banks urge Centre to extend emergency credit guarantee for small businesses till March next year

With rising commodity prices, FISME wants the abolition of import duties on steel, copper, aluminum and polymers. (Representational Image; Source: ShutterStock) The Indian Banks’ Association (IBA) has urged the government ... Read more »

NOCIL Q3 PAT seen up 17.6% YoY to Rs 26 cr: Sharekhan

Sharekhan has come out with its third quarter (October-December’ 21) earnings estimates for the Speciality Chemicals sector. The brokerage house expects NOCIL to report net profit at Rs 26 crore ... Read more »

COVID self-isolation rules, offshore wind farms and house prices

Listen to “Covid self-isolation rules, offshore wind farms and house prices”. Ian King explores the change to coronavirus self-isolation rules in England and the impact on businesses. He also speaks ... Read more »

iPhone 12, iPhone 11 sales help Apple dominate ultra-premium market in India with 70% share

iPhone 12 price in India during the Amazon Republic Day sale is set at Rs 53,999. Apple recorded its best year in terms of iPhone sales in India in 2021. ... Read more »

Unit 2 of Belarusian NPP to be launched in February — Rosatom

Director General of Russia’s state-run nuclear corporation Alexey Likhachev said that right now, the colleagues are waiting for a permission to switch to minimum controlled reactor power Read more »

Indian rupee falls 18 paise to 74.43 against US dollar in early trade

Representative image The rupee declined by 18 paise to 74.43 against the US dollar in opening trade on Tuesday, as strong American currency and elevated crude oil prices weighed on ... Read more »
On free-english-test.com you will find lots of free English exam practice materials to help you improve your English skills: grammar, listening, reading, writing, ielts, toeic