The government is mulling to make it mandatory for large companies to disclose their dues to the micro, small and medium enterprises to ensure that timely payments get made, Union Minister Nitin Gadkari said on Thursday.
The MSME minister conceded that despite various interventions, including promising micro, small and medium firms that payments by the central government and its undertakings will be made within 45 days of delivery of goods or service, a satisfactory solution to the problem has been elusive.
MSMEs are considered the backbone of the Indian economy, contributing the bulk of Indian employment, manufacturing and exports. Many such firms have been hit hard by the COVID-19 crisis.
"We are thinking of various ways on how micro, small and medium (enterprises) can get their money. One attempt is to make the bigger company declare whether they have paid MSME or not and make the same binding for them. There is thought going on," Gadkari said during an interaction with the small businesses focused industry lobby IMC.
Without elaborating on the details of the scheme being considered, Gadkari said the payment issue is "very serious" and added that non-payment leads to working capital becoming scarce for such businesses.
Gadkari also said the time is not correct to introduce any "strong legislation" on this front as everybody is suffering in the current crisis, but assured stakeholders of coming out with some solution.
Another scheme being considered is to partner with banks, wherein a bank pays the supplier in a specified time and starts collecting interest from the company which has received the goods or service, he said.
Gadkari also said the government is looking at a specially created "MSME Stock Exchange", which will have such small businesses listed on it. The government will provide equity of 15 per cent to those businesses which list on the platform.
The government will exit the investment by selling off its stake in two-three years and put the funds into other businesses in need of money, he said, adding that work to make a policy change is already underway.
Gadkari said the government's investment decision will be based on parameters like the firm's credit rating, Goods and Services Tax being paid by the business, its bank transactions, employment potential, exports and production.
Leading bourses already have dedicated SME platforms, where companies raising up to ₹25 crore are listed.
Asked about the troubles being faced by private hospitals in the financial capital where the state has taken over beds and also capped the payments which can be made, Gadkari said he will meet Maharashtra Chief Minister Uddhav Thackeray and raise the "serious issue" him.
Gadkari said the government has also given permission for MSMEs to export PPE (personal protective equipment) and added that the quality of Indian goods is good and rates are also less, which make them competitive in the global markets.
The minister also reiterated that a request has been made to Mother Dairy to manufacture honey biscuits at a plot in Wardha, adding that social reformer Vinoba Bhave had popularised the recipe of using honey, cow ghee and cow milk for the biscuits.