17 July, Srinagar: The Federation of Chambers of Industries Kashmir (FCIK) has pushed for the creation of an Alternate Dispute Resolution Cell (ADRC) to deal with the problem of government agencies and PSUs taking too long to pay its suppliers.
According to a statement, President FCIK ShahidKamili wrote to the Chief Secretary saying that the only way to end the problem of delayed payments to SMEs was to create an ADRC with the authority to mediate, negotiate, and arbitrate such disputes in accordance with the law and the provisions of the Micro, Small, and Medium Enterprises Development Act of 2006 (MSMED Act-2006).
Kamili lamented that the Micro and Small Enterprise Facilitation Council’s (MSEFC) present procedure to address the problem of late payments had been ineffective since it did not entail any action beyond informal follow-ups and reminders.
If payment to the providing organization is delayed by more than 45 days, the legislation mandates that the purchasing department pay to the MSME compound interest at monthly rests at 3 times the rate established by RBI. However, MSEFC has seldom resolved disputes along these lines. He said that businesspeople who were dissatisfied with the status quo had the option of filing legal petitions, but that this option was fraught with problems, such as the need for substantial resources that were beyond their reach.
The President of the FCIK said that the organization often hears complaints from micro, small, and medium-sized enterprises (MSMEs) about delays in the distribution of due payments, which have harmed their financial health by stifling cash flows and bringing them close to collapse.
Informed by the FCIK President, “since most of the MSMEs operated on bank support, the delay in the release of payment had resulted in the slipping of their accounts into NPA and stressful categories,” the banks had previously taken action in numerous NPA cases under the SAFEASI Act.
According to the President, when faced with such a predicament, small and medium-sized enterprises (SMEs) feel abandoned by their sponsors in the government, who are seeking to pin the blame on those who actually prevented them from regularly servicing their bank loans by withholding due payments.
According to the statement, President FCIK is disappointed that SICOP, in its intermediary role, has kept for itself hundreds of millions of rupees that rightfully belonged to the MSMEs that did the real supply work. SICOP has also failed to pay for industrial items supplied and works completed on its own projects under a number of different programs, including “Tameer.”
The FCIK has requested that the Chief Secretary convene a high-level meeting with the administrative heads of Finance, I&C, Law, and any other relevant department heads and stakeholders.