Government should extend loan repayment period under ECLGS for MSMEs: Parliamentary Committee

A parliamentary panel on Monday suggested that the government should extend the loan repayment period under the Emergency Credit Line Guarantee Scheme (ECLGS) for the MSME sector. The Parliamentary Standing Committee on Industry has also asked the government to digitize the GST system to ensure paperless refund of claims.

The committee noted that the repayment period of 3 to 4 years including the moratorium period under ECLGS is “too short” for MSMEs. MSMEs are struggling since the second corona wave. “Therefore, the committee recommends that the repayment period should be extended to 7-8 years with a moratorium of at least two years on the principal amount.”

“With regard to interest, the moratorium for interest should be announced by RBI with effect from March 1, 2020,” the committee said. Noting that many MSME-oriented products currently being imported can be manufactured in India, the panel suggested that a Central Market Intelligence Center be set up for import-related products and parts in the country.

Further, the committee said that the center may be entrusted with the task of preparing a list of products which are being imported along with their specifications. It should spread awareness through electronic, print and social media to attract aspiring entrepreneurs to set up new manufacturing enterprises in the MSME sector.

The Committee also expressed “deep concern” over the under-utilisation of funds by the Khadi and Village Industries Commission (KVIC) for its flagship schemes, which has hindered the promotion and development of Khadi and Village Industries and employment generation in rural areas. It was suggested that KVIC should try to popularize Khadi in new global markets.