‘Margins on government tenders holding back MSME progress’
Action-oriented, fair and transparent functioning of government departments should be put in place, says a seasoned entrepreneur
Even though there are no norms or mandatory rules laid down by the State government, demand for margins in the tenders called for by the government authorities is an unfair process. If I get the tender or say to get the tender 10 - 15 per cent margin amount has to be given to the concerned department - U Padmavathi
Hyderabad: Certain government tenders have deviated from established norms with authorities withholding margins arbitrarily. This deviation is stifling progress and requires urgent attention for the entrepreneurial ecosystem to flourish, says U Padmavathi, Proprietor, Unnati Stickers, leading label manufacturer for pharma giants in Hyderabad, and in the business for nearly 25 years.
Speaking with Bizz Buzz, Padmavathi revealed that even though there are no norms or mandatory rules laid down by the State government, demand for margins in the tenders called for by the government authorities is an unfair process. “If I get the tender or say to get the tender 10 - 15 per cent margin amount has to be given to the concerned department,” she pointed out.
Sharing her experience on ease of doing business overthe last 20 odd years, she said that the environment for MSMEs was healthier back thenas against the present.She added, “Government officials in the past would be physically present at the industrial land before sanctioning permissions, and certifications. Right now, despite TSIIC and TS-iPASS being in place, we are running behind these officials asking for certifications and sanctions.They are not showing interest and are taking more time to process it.”
Highlighting another setback for MSMEs, she said that delayed payments exceeding the 45-day MSME norm has pushed many industries towards becoming sick units, whileon the other hand, collateral-free loans sanctioned by banks come with high interest rate of 14 per cent.
Suggesting banks to increase the EMI window from 30 days to 45 days, she said, “Constant follow-up by bank officials is building up mental pressure on MSMEs. When MSMEs receive payments in 45 day window, banks should also give leverage on the same lines for collecting EMIs.”
As the State is progressing and developing, so is the cost of the land for setting up industries. Padmavathi is of the opinion that a MSMEs major investment share is taken up by setting up of infrastructure, wherein the land price has eventually increased over 23 years from Rs 300 per sq yd to Rs 75,000 - Rs 1 lakh per sq yd.
