Gujarat Inc feels collateral-free loans will help infuse liquidity

Ahmedabad/ Vadodara/ Surat/Rajkot: A slew of measures for Micro Small and Medium Enterprises (MSMEs) in the stimulus announced by Union finance minister Nirmala Sitharaman on Wednesday evening, came as a major relief to Gujarat Inc. The measures for infusion of capital in the MSME sector, 100% credit-guarantee in collateral-free loans for MSME units, change in definition of the MSMEs and extension of timelines for infrastructure projects under Real Estate Regulation Act (RERA), among others were hailed by industry players across sectors.
The announcement of collateral-free loans for MSMEs came as a major relief, which industry players feel will infuse the much-needed liquidity that has fallen severely short for industrialists. “Majority of the textile units fall under MSME and they will get direct benefit of the collateral-free automatic loan. Although there is no clarity on payment of wages during the lockdown period and releasing of subsidy under Technology Upgradation Fund (TUF), the textile entrepreneurs could avail loan benefit to pay off their debts and run the business,” said Bharat Gandhi, chairman, Federation of Indian Art Silk Weaving Industry (FIASWI).
“This will help build great confidence among MSMEs. Without these measures, several MSME units would be forced to shut operations,” said B S Patel, president, Panoli Industries’ Association.
Apart from textiles, the liquidity is also expected to ease woes in the gems and jewellery sector. “Majority of diamond polishing units fall under MSME category and are in dire need of liquidity. The relief in TDS will also aid the industry to tide over the crisis,” said Dinesh Navadiya, regional chairman, Gems and Jewellery Export Promotion Council (GJEPC).
Industry players also expect smooth and effective implementation of the measures announced by the ministry. “Beside capital infusion to MSME sector, opening of business opportunities will yield greater results. We look forward to an effective implementation. Apart from this, developing virtual exhibition portal is also an opportunity for IT industry,” said Jaimin Shah, board member, Nasscom Foundation.
Reeling from severe financial crunch, industries also expected measures allowing delay in salaries of employees for a couple of months or crediting it in instalments. Nilesh Shukla, president, India SME Forum, Gujarat Chapter, said,. “The government should have also allowed medium and small-scale firms to either defer salaries for a couple of months or give it in instalments. It will give the firms a breathing time and recover from the losses.”
“Besides, while changing the definition of MSMEs, we expected the government to increase the turnover limit of medium industries to Rs 250 crore instead of just Rs 100 crore,” he added.
All in all, the industry has termed it to be a comprehensive package. “Majority of demands on the MSMEs’ wishlist have been covered and with this, both short-term and long-term issues have been addressed,” said Nimish Phadke, managing director, Federation of Kutch Industries Association (FOKIA).
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“Declaration of Covid-19 as force majeure, extension of timelines for completion of projects under the RERA are crucial announcements for the developer community. We hope other measures for de-cartelization of cement prices, restoration of supply-chain to ease construction on the project sites and boosting demand with more sops to home-buyers by increasing the tax deduction limits will help the sector regain momentum.” Jaxay Shah, chairman, CREDAI – national
“The relaxation in contribution to PF will come as a major relief to units with larger employee strength. Furthermore, the extension in deadline of filing returns and reducing TDS rates by 25% will further help ease the overheads of the industry.” Durgesh Buch, president, GCCI
“Collateral-free loans will help address liquidity crisis and with this, even large-scale units will benefit as the MSMEs will be able to repay their dues. Money circulation will be fast in the market.” Narain Aggarwal, former chairperson, SRTEPC
“We need immediate relief. We were under the impression that the government will give us some benefit from June 1, but this package says we will get something from October 30, and the picture is not clear how the industry will get this benefit.” Parth Ganatra, vice-president, Rajkot Chamber of Commerce and Industry