The government will set up a ₹1-lakh-crore fund to repay outstanding payments to MSMEs owed by the Central and State government undertakings as well as major industries, Union Minister Nitin Gadkari said on Friday.
The Minister said he has devised a scheme to set up the fund and the proposal may be placed before the Cabinet for approval once the Finance Ministry gives its go-ahead.
“We have decided to set up a fund of ₹1 lakh crore. We will insure this fund with the government paying the premium. We will come up with a formula for sharing of the interest burden between the paying entity and payment-receiving entity and banks against this fund, for the payments due to MSMEs which are stuck with the PSUs, Centre and State governments and major industries,” Mr. Gadkari said.
The Minister for MSME and Road Transport and Highways said the fund will impart relief to the Micro, Small and Medium Enterprises (MSMEs) sector to a certain extent.
He said the corpus will be a mobile fund that will help increase liquidity in the market. Interacting with representatives of Assocham via video-conferencing, the Minister asked the industry chamber to explore a technical joint venture through investment of capital between Indian industry and major global corporations.
Mr. Gadkari also suggested the industry body to compile investment data regarding companies from the U.S., the U.K. and other nations present in China and invite them to set up businesses in India.
The Minister said he is willing to monitor this initiative to expedite all the required permissions in this regard.
Besides, Mr. Gadkari said he would take up the issue of expediting GST and income tax refunds with Finance Minister Nirmala Sitharaman to ease MSMEs’ liquidity issue.
“I am also going to recommend to the Finance Minister that since computerised systems are in place for GST and income tax refunds, why can’t we expedite the system and process refunds within 8 days,” he said.