MSMEs seek deferment of minimum wages for one year

Hit hard by the nationwide lockdown, enforced to contain to the spread of coronavirus pandemic, the state's 6.50 lakh micro, small and medium enterprises (MSMEs) have sought several incentives and concessions to cope with the losses over the next few months.

The Federation of Karnataka Chambers of Commerce and Industry (FKCCI), in a letter to the Prime Minister Narendra Modi, demanded abeyance of payment of minimum wages for at least one year. Further, no inspector raj by the Labour Department for at least six months where by no inspection of any kind to be made for the period, FKCCI President C R Janardhana said.

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This will enable the MSMEs to revive without any interruption, he said.

The MSME sector is facing a salary burden of an average Rs 6,500 crore per month with the implementation of minimum wage scheme from April this year. Last year, the Karnataka government had asked the industries to pay minimum wages of Rs 12,500 per month for unskilled and Rs 13,000 per month for skilled workers from April this year.

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Citing the example of neighbouring states such as Telangana, Andhra Pradesh, and Tamil Nadu, he said the minimum wages vary between Rs 8,000 and Rs 9,000 there, whereas Karnataka has made it mandatory to pay Rs 13,000 per month. “It is impossible for MSMEs, especially in rural areas, to pay such a high minimum wage in addition to very high electricity charges, rent and manage their business. We have seen, already, readymade garment industries have migrated from Karnataka to Tamil Nadu and Andhra Pradesh. Karnataka has lost hundreds of jobs,” Janardhana said.

"There is a need for lifting the lockdown in a phased manner to allow low density industries to function in shifts and to allow high-density labour-intensive industries to work in 3 staggered shifts," he said.

He has also highlighted the need to release payments due to MSMEs and traders from central, state, PSUs, private and large enterprises. It is the right time to roll out incentives to MSMEs to manufacture locally, he said.

Some of the major concerns of the industry body relates to relaxing the prescribed time limit for the payment of GST and for immediate refunds, as well as postponing the dates for statutory compliances, hand hold the industries, especially MSMEs by bearing the cost of PF and ESI by the government, during the lockdown period.

“There is a need for providing moratorium of repayment for all types of loans, arrange for soft loans to meet fixed expenses, organise rescheduling of loans, and ensure for liberal Working Capital Finance for all GST registered MSMEs and exporters,” FKCCI president added.