Finance Minister Sitharaman initiated a step in February’s interim budget to help the MSMEs receive their payments on time. The rule was applied successfully on 1 April 2024. However, it’s been almost two months but the MSMEs seem to be even more disappointed than they were earlier. Several MSMEs cried for timely payment as they have delayed payments for the past two years, three years, or even a decade. Will the government take back the rule after MSMEs’ complaints?
Finance Minister Sitharaman is going to reconsider the 45-day payment rule. The main reason behind the reconsideration is the increasing complaints from MSMEs about losing their business after the rule. FM Sitharaman mentions that the rule was for the benefit of the MSMEs as they were not able to maintain the working capital flow in their business. However, if they are okay with a delay in the payment for more than 45 days, six months, a year, or even more, then they can reconsider the rule in the July budget.
The 45-day payment rule is applicable from 1 April 2024. However, the MSMEs faced a lot of challenges soon after the implementation of the rule. As the buyers stopped buying from them or ordering from them, many MSMEs reported that their buyers shifted to large enterprises or non-MSMEs for the purchase. The MSMEs started having a loss of the business. Thus, they decided to file complaints to take back this rule. Apart from that, several MSMEs unregistered themselves from the Udyam portal.
Those going as per the new rules were also not getting the payment in the 45 days. Thus, they decided to file a complaint against the buyers. There are thousands of complaints with crores of money pending to be received. On the other hand, MSMEs are also facing payment issues from the traders. According to the Federation of All India Vyapar Mandal, and Chennai and West Bengal associations, they have a payment cycle of more than 45 days. It means their buyers make payments after 45 45-day cycle.
They question how will they pay MSME sellers on time if they are not getting the payment from buyers in 45-day cycles. It will disrupt their payment cycle creating a gap where they have to pay the sellers earlier than they received from the buyers. Thus, there is a need to change the whole payment cycle to benefit the MSMEs or any other business units. It can consume a lot of energy and resources as well.