MSMEs have time till June-end for claiming covid related relief: finance ministry

The Ministry of Finance on Tuesday said that Micro, Small and Medium Enterprises (MSMEs) have time till 30 June to submit their claims under the scheme meant for compensating them for damages from non-execution of contracts during the covid period. 

The ‘Vivad se Vishwas I - Relief to MSMEs scheme’ was announced in the Union Budget 2023-24 by Finance Minister Nirmala Sitharaman. The relief provided under this scheme is in continuation to the efforts of the government in promoting and sustaining the MSME sector.

 “In cases of failure by MSMEs to execute contracts during the COVID period, 95 per cent of the forfeited amount relating to bid or performance security will be returned to them by the government. This will provide relief to MSMEs,” Sitharaman had said. The ministry has already issued the broad structure of the scheme and instructions in this regard, extending the relief to cover more cases and relaxing the limits of refunds.

Under the scheme, ministries have been asked to refund performance security, bid security, and liquidated damages forfeited/deducted during the COVID-19 pandemic. Certain relief has also been provided to MSMEs debarred for default in the execution of contracts during the COVID-19 period. The scheme also provides for refunding 95% of the risk purchase amount realized.

The scheme aims to help eligible MSMEs affected during the COVID-19 period by refunding 95% of the performance security forfeited, bid security, liquidated damages deducted, and risk purchase amount realized.

As per the order from department of expenditure to central and state officials, relief will be provided in all contracts with MSMEs for procurement of goods and services.

The scheme, which commenced on April 17, 2023, is applicable to registered MSMEs for any category of goods and services.

In case any firm has been debarred only due to default in execution of such contracts, such debarment shall also be revoked, by issuing an appropriate order by the procuring entity.