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Extend Interest Equalisation, Restart 2% Interest Subvention Scheme For MSMEs: PHDCCI

The industry body recommends the two per cent Interest Subvention Scheme for MSMEs be restarted which was in force till 31 March 2021 to help MSMEs

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PHD Chamber of Commerce and Industry in its pre-budget memorandum has urged the Centre to extend Interest Equalisation Scheme and restart a two per cent Interest Subvention Scheme for micro, small and medium enterprises (MSMEs).

It said that extending the Interest Equalisation Scheme for pre and post-shipment rupee export credit to service exporters, which represent almost 40 per cent of total exports. Currently, the scheme only extends to manly extends to manufacturers and merchant exporters. This would give a much-needed boost to MSME exports. 

The industry body also recommended reconsidering the provision of the 90-day limit for classifying MSMEs’ over dues into non-performing assets (NPAs). 

"The working cycle of MSMEs in many cases extends much beyond the 90-day period, thereby MSMEs struggle to receive timely payments from their buyers, and end up defaulting on loans in multiple cases," it added.

According to the Chamber, the limit should be increased to 180 days.

It also urged the Modi government to extend the restructuring of loans facility introduced on 21 August 2020 to restructure existing loans without downgrading the current asset classification further to enable MSMEs to cope with the post-pandemic recovery. 

The same facility was discontinued at 30 September 2021.

Meanwhile, the Chamber added that there is an urgent need to the revival of the Credit Linked Capital Subsidy scheme for technology upgradation under the Ministry of MSME as it is pertinent for sector to continuously upgrade to become globally competitive.