President of SIEMA- Southern India Engineering Manufacturers’ Association K.V.Karthik requested the Central Government to sanction an additional 20% loan under Emergency Credit Line Guarantee Scheme (ECLG) for the Industries on their working capital/cash credit limits by banks and NBDCs with 3 years repayment and 1 year holiday period to sail through this current economic crisis caused by the second wave.
He highlighted that the second wave has indirectly hit the MSME sector on the whole, and the members of this sector are foreseeing a slowdown in their manufacturing activities in the next 6 months. Karthik shared that the supply chain of MSME industries throughout India is badly affected which has a direct bearing on the sales, leading to severe shortage of cash flow. This has resulted in non-payment of dues to the banks.
The other factor for severe cash crunch is due to the increase in all raw material prices to the tune of more than 40%. He said that the industry is grateful to the government for releasing 20% loan under ECLG scheme during the first wave, but now due to the current predicament, the first trench of 20% loan has become insufficient.He urged the Centre to extend the moratorium period up to December 2022 for both interest dues and term loan repayment.
Karthik also conveyed that banks are pressurizing the MSMEs for dues, and he appealed the Finance Minister to intervene in this matter, as the industry’s business and cash flow are heavily affected in this second wave.