PHDCCI interacts with Shri Sanjay Malhotra, Governor, Reserve Bank of India during RBI Governor’s meeting with the Trade Bodies and Depositors’ Association

PR No – 51

22nd January, 2025

New Delhi

 

PHDCCI interacts with Shri Sanjay Malhotra, Governor, Reserve Bank of India during RBI Governor’s meeting with the Trade Bodies and Depositors’ Association

 

PHDCCI in its interaction with Shri Sanjay Malhotra, Governor, Reserve Bank of India, submitted suggestions related to constraints in availability of adequate credit from Banks and Financial Institutions; uniformity and digitalization in documentation; change in classification norms of MSMEs for NPAs; interest equalization scheme on Pre and Post Shipment Export Credit; priority sector classification for credit to MSMEs through NBFCs; additional credit limits to Companies/PSUs joining TReDS; equity infusion for MSMEs through Fund of Funds; fostering manufacturing-led development; enhancing ease of doing business and restructuring of supply chains.

PHDCCI suggests addressing the constraints in availability of adequate credit from Banks and FIs to Micro and Small Enterprises. Under the Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGTMSE), establishing a Help Desk either in RBI or in the Ministry of MSME, with a nodal officer will increase the ease of  availability of credit.

PHDCCI recommends standardization and digitization of the entire process of documentation to make the whole process simple and uniform.

On the MSME front, PHDCCI proposed several measures to enhance the growth and sustainability of MSMEs, which are the backbone of the Indian economy.

PHDCCI suggested extending the classification norms of MSMEs for Non-Performing Assets (NPAs) and the Restructuring Scheme for MSMEs, as approved by the Reserve Bank of India (RBI). Currently, dues for MSMEs are classified as overdue after 90 days, which can adversely affect their ability to access credit from banks

PHDCCI recommends extending this period to 180 days to allow MSMEs more time to manage their financial challenges without facing NPA classifications.

Another important proposal was to expand the scope of the Interest Equalization Scheme on Pre and Post Shipment Export Credit. This scheme, which provides interest subvention for MSME manufacturers and merchant exporters, should also include MSME service exporters. This change would ensure that service exporters, who are an integral part of India’s economy, are also able to benefit from the government’s support.

PHDCCI recommended that the MSE Facilitation Councils, which currently cover only Micro and Small Enterprises, should also be extended to cover Medium Enterprises. This would help address the delayed payment issues faced by these enterprises, allowing them to settle dues within 45 days if no specific payment date is mentioned in the purchase order. This change would provide much-needed relief to MSMEs, which often face liquidity constraints due to delayed payments from large buyers.

The other points submitted for MSME’s were priority sector classification for credit to MSMEs through NBFCs, additional credit limits to Companies/PSUs joining TReDS and equity infusion for MSMEs through fund of funds.

The industry body suggests enhancing ease of doing business, particularly the National Single Window System for further streamlining the processes, facilitating business operations and encouraging investment across the length and breadth of the nation. Further, reforms should focus more to reduce costs of doing business including costs of capital, costs of power, costs of logistics, costs of land and costs of compliances.

Dr Ranjeet Mehta highlights the need for the government to enhance the manufacturing sector, increase infrastructure investment, and promote innovation.

We further suggest focus should be on improving logistical infrastructure and connectivity, thereby lowering communication and transportation costs to enhance manufacturing productivity and competitiveness said Dr Ranjeet Mehta, Secretary General|CEO, PHDCCI.

The government should actively take advantage of current industrial restructuring of supply chains, as India has friendly relations with major industrialized countries. Moreover, India is a center of global workforce in contrast to rapidly ageing populations in most industrialized countries, which will boost the industrial sector, said industry body.

The digital report submitted to RBI is attached.

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Warm Regards,

Media Division,  PHDCCI