80% MSMEs in TS facing difficulties, 25% without revenues: KTR in letter to Nirmala Sitharaman

KTR said that it has been more than a year since the Prime Minister announced a Rs. 20 lakh crore aid package in the name of Atmanirbhar Bharat to help various sectors affected by the COVID-19 crisis. "I have been working hard to ensure that the micro and medium enterprises, which are the backbone of the manufacturing sector in Telangana, benefit from this package. I am sorry to inform you that the attractive elements in the package you have announced are the most minimal for the micro and medium industries here which have been severely affected by the corona crisis," KTR wrote, adding that more than 80 per cent of MSMEs in the state have been facing severe difficulties in the wake of the lockdown with more than 25 per cent of MSMEs losing their revenues altogether.

KTR said Rs. 3 lakh crore from the package was earmarked for the Guaranteed Emergency Credit Line Scheme, mainly for MSMEs. However, after the release of the scheme guidelines, MSMEs in Telangana feel that there is nothing special about this scheme, he said.

"Moreover the most complex process has been devised to benefit from this scheme. As a result, MSMEs face many challenges. It is not possible for all MSMEs to meet their requirements through the same scheme as each unit faces different difficulties and challenges. I think MSMEs can be supported by giving a huge financial grant to cover the losses caused by the corona crisis. I hope you will also agree that MSMEs, which have been in crisis for over a year, are still facing problems such as supply chain distribution, severe labor shortages, and changed customer preferences in the case of a few other MSMEs," KTR said.

The minister also added that the Atmanirbhar Bharat Assistance Package has announced two more schemes for debt-ridden MSME units and Innovative MSMEs. "Unfortunately, according to the information available at present, nowhere in the country, except in Telangana, does it appear that these two schemes have started. The Subordinate Debt Scheme announced for debt-ridden MSMEs offers the lowest loan amount. However, there is no clarity on the viability of MSMEs in the current crisis situation. In such a case the minimum loan amount you can give is not enough to meet the needs of the respective MSMEs. In addition, the Corpus Fund Scheme guidelines announced for Innovative MSMEs have not yet been released," the minister added.

While acknowledging that the PLI scheme announced for key sectors as part of the Atmanirbhar package was likely to have a huge positive impact on MSMEs in the country, KTR said the current scheme is meant to benefit only large manufacturing companies. The program guidelines need to be changed so that PLI benefits can be shared with the respective MSMEs by making it a rule for large manufacturing companies to set up a supply chain with domestic MSMEs, he said.

KTR said that in the light of the possibility of a third phase of COVID-19, redefining the current self-help package will give a boost to the various sectors affected by the pandemic, especially the MSME sector.