Home / Economy / Over 10 tn locked up in delayed payments to MSMEs

NEW DELHI : A sum of 10.7 trillion, nearly 6% of the Gross Value Added (GVA) of Indian businesses, is locked up annually as delayed payments from buyers to MSME suppliers, said India’s first comprehensive report on the subject.

The report by the Global Alliance for Mass Entrepreneurship (GAME) and Dun & Bradstreet (D&B) India was presented to the Union minister for MSME Narayan Rane on Monday.

The report is the first of its kind to comprehensively uncover the issue of delayed payments and look into the impact of this practice on MSMEs’ survival and growth, supply chains and the overall economy.

Highlighting the key role of MSMEs in powering the Indian economy to its targetted $5 trillion future, Rane said delayed payments by buyers weaken MSME suppliers and impede their growth. “The government has been implementing a series of interventions to address this problem. At the same time, given the complexity of the problem, a lasting solution will need all stakeholders- the buyers, solution providers and MSMEs — to come together to address it."

MSME secretary BB Swain said MSMEs make up 50% of the economy. “Cash-strapped MSMEs are driven to use up their limited resources on chasing collections instead of being able to invest in business development. Often, they are forced to borrow at high interest rates to offset their cash flow deficit, making the situation even more worrisome. We must strive for fairer and ethical business practices. Prompt payment to MSME figures on top of that agenda," he said.

A ‘Prompt Payment Pledge’ was taken earlier by Maruti Suzuki India, HDFC Bank, RPG Group, Nestle India, Tata Play, Homelane, MTR Foods, CGI India, Lighstorm Technologies, Bangalore International Airport Ltd. Elgi Equipments, Persistent Systems and Ernst &Young India.


Swati Luthra

Swati Luthra writes on climate change, water, environment and forest issues for Mint. A graduate in Psychology, Swati has been mapping India’s policy initiatives to help meet the pledges made at CoP-26 including achieving net-zero carbon emissions by 2070.
Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less

Recommended For You

Trending Stocks

Get alerts on WhatsApp
Set Preferences My ReadsWatchlistFeedbackRedeem a Gift CardLogout