6,200 enterprises shut biz in FY22, says govt

A total of 6,200 enterprises shut down business during 2021-22, the data from Udyam Registration Portal shows, the government said in the Lok Sabha today.

Replying to a question about the number of Micro, Small and Medium Enterprises (MSMEs) shut down during the year 2022, minister of state for MSMEs, Bhanu Pratap Singh Verma said the businesses shut in the year represented 0.0004% of the total MSMEs registered on the Udyam Registration Portal.

"Over 1.38 crore enterprises have registered during 01.07.2020 to 30.01.2023 on Udyam Registration Portal, of which 6,222 enterprises shut down business during 2021-22," the minister said.

On assistance provided to such MSME units, the minister says the Centre has extended ₹5 lakh crore Emergency Credit Line Guarantee Scheme for businesses, including MSMEs. Other measures taken include ₹50,000 crore equity infusion through Self-Reliant India Fund, newly revised criteria for the classification of MSMEs, no global tenders for procurement up to ₹200 crore, and Udyam Registration.

The minister says a SIDBI survey conducted on the Covid impact from September 2021 to January 2022 for a sample size of 1,029 MSMEs across 20 states and 2 UTs showed 67% of the surveyed enterprises were "temporarily closed up to 3 months". Also, 65% of them had availed the benefits under Emergency Credit Line Guarantee Scheme and around 36% availed loans under the Credit Guarantee Scheme.

Notably, in the Budget 2023-24 announcements on Wednesday, Finance Minister Nirmala Sitharaman announced a couple of measures for the MSMEs sector. Revamping the credit guarantee scheme for MSMEs, from April 1, 2023, ₹9,000 crore will be infused in the corpus, which will enable additional collateral-free guaranteed credit of ₹2 lakh crore, the FM said. "Further, the cost of the credit will be reduced by about 1%."

Under Vivad se Vishwas I, in cases of failure by MSMEs to execute contracts during the Covid period, 95% of the forfeited amount relating to bid or performance security, will be returned to them by government and government undertakings, the FM said. To settle contractual disputes of government and government undertakings, wherein arbitral award is under challenge in a court, a voluntary settlement scheme with standardised terms will be introduced, the minister said. An Entity DigiLocker will also be set up for use by MSMEs, large businesses and charitable trusts in order for them to store and share documents online securely.

"The ₹9,000 crore infusion amount in the corpus would further push the entrepreneurial spirit of the country. The upcoming year looks good for agritech and EV startups, with the announcement of the Agriculture Accelerator Fund, along with the initiatives to reduce the costs of lithium-ion batteries. Additionally, we applaud the initiative towards enabling upskilling and innovation in artificial intelligence via the centres of excellence for AI proposed in this year’s budget," Kanika Mayar, Partner, Vertex Ventures, SEA & India.

Meanwhile, the FM says micro-enterprises, with a turnover of up to ₹2 crore, and certain professionals, with a turnover of up to ₹50 lakh, can avail the benefit of "presumptive taxation". "I propose to provide enhanced limits of ₹3 crore and ₹75 lakh respectively, to the taxpayers whose cash receipts are no more than 5%."