Srinagar: The Federation of Chambers of Industries Kashmir (FCIK) has called on the Government to consider an immediate, one-time budgetary provision in the forthcoming Budget for liquidation of the long-pending dues of MSMEs, stressing that clearing these backlogs is essential to relieve local enterprises from years of suffocation and financial stress, restore their faith and confidence, and create an ecosystem conducive to future entrepreneurship and developmental initiatives.
In a statement, the valley’s apex industrial chamber has appealed to the Chief Minister Omar Abdullah to treat the issue of delayed MSME payments as an economic priority, expressing the hope that the upcoming Budget will prioritize the clearance of all pending dues and send a reassuring message to local entrepreneurs that their contributions will be protected and that administrative shortcomings will no longer come at the cost of local enterprises.
FCIK has expressed great concern that hundreds of local MSMEs in Jammu and Kashmir are being pushed towards collapse due to years-long non-release of payments by Government Departments, PSUs, and intermediary agencies on one or the other pretexts, despite supplies having been made and works executed.
“Over the past several years, a large number of MSMEs have collapsed not due to inefficiency, but because Government dues remained unpaid for years, pushing otherwise healthy units into stressed accounts and Non-Performing Assets (NPAs),” said FCIK, adding that, regrettably, while banks have initiated coercive recovery actions under the stringent SARFAESI Act against many of these enterprises, the defaulting Government departments continue to operate without any accountability.
FCIK stated that delayed Government payments have shattered the credibility of local entrepreneurs, leaving them mistrusted by suppliers, lenders, and traders, and eroding the very goodwill on which their businesses depend.
FCIK has condemned the justifications being offered by some Government authorities for withholding payments—citing lack of administrative approval or technical sanction—despite the fact that orders were officially placed and supplies fully delivered and accepted.
“It is quite shocking that instead of holding the officers who issued such orders accountable, the burden has been unfairly shifted onto hapless MSMEs,” observed FCIK.
FCIK expressed surprise at the discriminatory contracting practices of the Government, noting that composite contracts awarded to outside agencies often included highly favourable payment terms—up to 25% advance, 50% on delivery, and the balance on completion—while local MSMEs were and continue to be forced to work entirely on credit.
FCIK remarked that this unequal treatment has systematically weakened local industry and handed an unfair advantage to outside players at the expense of Jammu and Kashmir’s own enterprises.
FCIK further informed that in several cases payments have been blocked on the pretext that entire schemes are under investigation or PSUs are being wound up, including works executed under the SAUBHAGYA scheme, Jal Jeevan Mission, and supplies made and works executed for J&K Projects Construction Corporation (JKPCC).
“How can the investigations, PSU closures, or mergers become a licence to indefinitely withhold payments of innocent MSMEs who have merely supplied material or executed assigned works and have no role whatsoever in project execution or administrative decisions”, questioned FCIK.
FCIK has emphasised that the forthcoming Budget provides a unique opportunity to clear the entire backlog of pending payments to MSMEs through a one-time budgetary provision.
Such a measure would not only relieve the cash flow stress of local enterprises but also restore confidence in Government policies, sending a clear signal that the contributions of MSMEs are now valued and protected.
The Chamber has further appealed to the Chief Minister to consider FCIK’s recommendations from its comprehensive industrial policy review proposal to resolve issue of delayed payments, cautioning that unless an automatic and non-discretionary payment mechanism is implemented, such delays will continue to suffocate MSMEs and undermine confidence.
