Hit by Covid-19 lockdown, start-ups and SMEs seek slew of sops from Govt

The Covid-19 impact has been devastating on Indian start-ups and small and medium enterprises, with millions of such enterprises, which were considered the backbone of the Indian economy, now looking to the Government for help, according to the community platform LocalCircles.

The platform conducted a survey among 35,000 start-up and SME community members to get a pulse on what the Government could do to mitigate the impact of Coronavirus on small businesses. It received more than 29,000 responses from start-ups, SMEs and entrepreneurs.

In the wake of the Coronavirus outbreak and the effect it is having on small businesses, the first question was about how the Government could best help start-ups in sustaining through this crisis. About 31 per cent said the Government should reimburse 50 per cent salaries of start-up employees for one month for all Department for Promotion of Industry and Internal Trade (DPIIT) registered firms. Around 23 per cent said a one-time grant of Rs 20 lakh should be given to such companies with Registrar of Companies (ROC) filings up to date. About 16 per cent said a 2-year interest-free loan of up to 1 crore should be given to all DPIIT registered ventures with ROC filings up to date, while 30 per cent said none of the above should be done.

“With the lockdown being ordered throughout the country, production, delivery, sales, marketing and at the end earnings are taking a big hit, as people are not allowed to move out of their houses,” said LocalCircles.

While many businesses are exercising force majeure to get out of contracts, some are giving work from home as an excuse to not being able to pay vendors. All of this creates tremendous pressure on SME and start-ups, many of which operate with 1-2 months of cash flow. To make things worse, LocalCircles said several district magistrates have started issuing orders mandating businesses to pay daily wages of factory workers and shop workers that are unable to come to work due to the lockdown orders issued by the State Government.

One of the questions asked in the survey was how should the Government restructure 2 per cent of corporate profits (2020-21) currently designated for Corporate Social Responsibility (CSR) to save small businesses. About 38 per cent respondents said that 1 per cent should be allowed to be put into start-ups/SMEs and the other 1 per cent into CSR.  Majority of the small firms have also requested that all public sector units, government departments and corporates should be mandated to pay 2019-20 invoices of start-ups and SMEs.

The US Government recently announced a $2 trillion relief package for its citizens and businesses who have been impacted by the Covid-19 pandemic. This includes a $350 million in loans and other assistance for the small businesses of the country. The UK also announced a £3 billion per month bailout for Britain’s 3.8 million self-employed.

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