The momentum set by this economic package will help industries to pick themselves up from the economic slowdown and coronavirus outbreak that they were battling with, says Indradev Babu, President, IMTMA

Bengaluru (Karnataka)

The first tranche of economic package to counter the coronavirus pandemic, announced by the Finance Minister of India, reaffirms the country’s commitment to macro-economic stability, prudent fiscal management and uplifting indigenous manufacturing, according to the Indian Machine Tool Manufacturers' Association (IMTMA).

The growth tonic for MSMEs such as collateral free automatic loan for upto Rs 3 lakh crores, covering borrowers with up to Rs 25 crores outstanding and Rs 100 crores turnover, will enable them to meet operational expenses. The loans come with a 4-year tenor with moratorium of 12 months on principal repayment. The interest to be capped at 100 per cent credit guarantee covers to banks and NBFCs on principal and interest can be availed till October 31, 2020 and will enable 45 lakh units to resume business activities and safeguard jobs.

It is also heartening to note that approximately 2 lakh MSMEs are likely to benefit from the Rs 20,000 crores subordinate debt for stressed MSMEs. Other measures such as Rs 50,000 crore equity infusion for MSMEs through Fund of Funds with corpus of Rs 10,000 crores, revision of investment limit upwards, elimination of distinction between manufacturing and service sector, disallowing of global tenders upto Rs 200 crores will help MSMEs increase their business. Tax reductions by 25 per cent of the existing rates for tax deducted at source and tax collected at source will release liquidity of Rs 50,000 crores which is expected to boost consumption.

Interestingly, the government will provide EPF support for business and workers for 3 more months providing liquidity relief of Rs 2,500 crores to 3.67 lakh establishments and 72.22 lakh employees. The statutory PF contribution of both employer and employee will be reduced to 10 per cent from existing 12 per cent for all establishments covered by EPFO for the next 3 months. Furthermore, to ease cash flows government agencies will partially release bank guarantees to the extent contracts are completed.

Welcoming the announcements made by the Finance Minister, Indradev Babu, President, IMTMA, said, “These are vital steps to spur manufacturing growth and offer significant opportunities for the capital goods sector and machine tool industry since a large number of MSMEs dot its manufacturing landscape. The sops will take some time to trickle down to the end users resulting in demand for goods and services. However, the momentum set by this economic package will help industries to pick themselves up from the economic slowdown and coronavirus outbreak that they were battling with. The industry now needs to intensify their R&D initiatives and manufacture products that can be sold globally.”

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Agreeing with Indradev Babu’s thoughts, V Anbu, Director General & CEO, IMTMA, said, “Vibrant manufacturing is vital for the country’s growth and the measures announced in the economic package will provide much needed liquidity for industries, promote local manufacturing, spur demand and help them steer away from uncertainties.”