TReDS could help bail out MSMEs in TN from liquidity crisis

Chennai:

The micro small and medium enterprises (MSME) in Tamil Nadu, which are
struggling due to delay in payment  of their invoices by large public
sector units as well as corporate sector, have something to cheer
about during this budget with the Union government planning to set up
Trade Receivables Discounting System (TReDS).



Reacting to the Budget announcements of Union Finance Minister Arun
Jaitley, C Muthusami, president of Tamil Nadu Small and Tiny
Industries Association (TANSTIA) and C K Mohan, vice-president of
TANSTIA said that the scheme for setting up and operating the
institutional mechanism for facilitating the financing of trade
receivables of Micro, Small & Medium Enterprises (MSMEs) will rescue
many sick units which have been forced to shut shops due to delay in
payment of invoices by the corporates.



They said that thousands of crore worth payment is due from the
corporates and public sector units and establishment of TReDS would
improve the liquidity in the MSME sector significantly. Mohan said
that atleast 50 per cent MSME units in the state have turned sick due
to delay in payment of invoices.



Mohan said that MSMEs wanted judicial power under Delayed Payment Act
so that MSMEs don’t have to go to the High Court to settle the
non-payment issue. “It could have been settled by the District
Industries Centre itself,” he said. However, MSME welcomes the plan to
establish TReDS which is a step in right direction.



TANSTIA also welcomed Micro Units Development Refinance Agency (Mudra)
Bank to refinance MSME sector besides setting up of SETU (Self
Employment and Talent Utilisation), a techno-financial, incubation and
facilitation programme to support all aspects of start-up businesses,
and other self-employment activities, particularly in
technology-driven areas.



Mohan also welcomed the Finance Minister’s announcement regarding ESI.
“This will end the inpector Raaj. Earlier it was mandatory for all
small businesses to opt only for ESI,” said Mohan. “Now the employee
has the option of choosing either ESI or a Health Insurance product,
recognized by the Insurance Regulatory Development Authority (IRDA),”
he added.