Export units, trading firms and hospitality ventures may also tap the ₹3 lakh crore credit facility offered to micro, small and medium enterprise (MSMEs) under the recent economic stimulus package even if they are not registered as MSMEs, but meet the eligibility criteria, two government officials said, requesting anonymity.
The emergency credit facility was announced by finance minister Nirmala Sitharaman on May 13 as a part of the first tranche of the Aatmanirbhar Bharat Abhiyan (Self-Reliant India Initiative). It provides an additional working capital loan at a concessional rate of interest to an existing borrower who is not a defaulter.
The scheme offers additional working capital finance of 20% of the outstanding credit as of February 29, 2020 in the form of a term loan to units with up to ₹25 crore outstanding loans and revenue of up to ₹100 crore.
The National Credit Guarantee Trustee Co. Ltd (NCGTC) issued the operational guideline of the Emergency Credit Line Guarantee Scheme (ECLGS) for financial institutions on Saturday, the two officials said. NCGTC is a wholly owned company of the Union government formed in March 2014 to act as a trustee for multiple credit guarantee funds.
The Union finance minister said on May 17 that the ₹3 lakh crore emergency working capital facility scheme was 100% guaranteed by the federal government and it would benefit more than 4.5 million MSMEs.
Industry had, asked the government to expand the scheme to exporters, traders, the hospitality sector and other MSMEs. India has about 65 million MSMEs.
“It seems that there is some ambiguity that needs to be clarified appropriately,” one of the officials said.
PHD Chamber of Commerce and Industry president DK Aggarwal said the association had submitted a representation to the ministries of finance and MSMEs, seeking a specific clarification on inclusion of businesses such as export units, traders, hospitality ventures, and media and entertainment houses.
“The Chamber is optimistic the government will consider the representation and make the necessary amendment to boost the morale of the grief-stricken Indian Industry and help then resume and revive,” he said.
Federation of Indian Export Organisations (FIEO) director general Ajay Sahai said: “All businesses whether traders or merchants exporters should also be extended the benefit of the guaranteed emergency credit line. This will ease out liquidity at their end, helping them to bring slowly their businesses on track; else a fairly large number of them may not be able to see revival.”
“The survival of merchant exporters is needed as they add value to exports, do exports consolidation and do aggressive marketing for products manufactured by MSMEs. Traders’ contributions to economy cannot be undermined particularly as our household shopkeeper were at the forefront of our corona fight, second only to our health workers,” he added.
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