COVID-19 hit MSMEs can tap new relief window from January 1

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The new year could ring in some relief for India’s Micro, Small and Medium Enterprises (MSMEs) embroiled in disputes with central government agencies due to the COVID-19 pandemic, with the Centre reviving a scheme to settle their claims in such cases. 

Starting January 1, 2024, MSMEs can submit fresh claims under the Vivad Se Vishwas I scheme, which had originally admitted claims between mid-April to end of July this year. The new window for firms to file claims under the scheme, which had settled ₹650 crore in almost 44,000 cases by the beginning of December, will now be kept open till March 31.  

Also Read | Centre grants about ₹250 crore to settle MSME disputes as pandemic relief

“It has been brought to the notice of this Department that eligible MSMEs could not lodge their claims on the portals because of lack of information about the scheme,” the Department of Expenditure in the Finance Ministry said in an office memo dated December 22. “In view of above, it has been decided that eligible claims under the subject scheme can now also be submitted from 1.1.2024 to 31.03.2024,” the memo added. 

Announced by Finance Minister Nirmala Sitharaman in the Union Budget 2023-24, the Vivad Se Vishwas (VSVS) I scheme was aimed at providing relief to MSMEs unable to comply with central government contracts due to the pandemic. Launched on April 11, it covered all procurement contracts related to goods, services and works entered into by government departments. 

Also Read | Centre settles more than 43000 MSME claims; refunds ₹700 cr.

“It’s clear the government has confirmed that information about the scheme was not disseminated adequately. Its detailing is also flawed as MSMEs need not file a claim to get their earnest money or security deposits with departments – whether they completed their contract or not,” said KE Raghunathan, national chairman, Association of Indian Entrepreneurs.

“This is a classic case of the gap between government’s intent and its directions. Normally such schemes are conceived to prevent misuse, but it looks like this scheme is designed to prevent even genuine users from availing it,” he added, urging MSMEs’ security deposits must be returned with interest, otherwise they stand to lose nearly 36% of the sum in three years.

Also Read | In pandemic shock, critical lessons for MSMEs 

A similar VSVS II scheme was launched to resolve pending contractual disputes related to public procurement. Claims were accepted under the scheme till October, and more than 900 claims worth ₹20,000 crore were received. By mid-December, claims worth ₹1,652 crore had been settled under this scheme.

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