Govt provides relief to MSMEs to refund damages deducted during COVID-19

New Delhi [India], February 6 : The Ministry of Finance on Monday provided a major relief to Micro, Small and Medium Enterprises (MSMEs) by asking ministries to refund performance security/ bid security and liquidated damages forfeited/ deducted during the COVID-19 pandemic, according to a press release.
An order has been issued by the Department of Expenditure in this regard.
The order has been issued as a follow-up to the "Vivad se Vishwas-I" scheme announced in the Budget Speech 2023-24 by the Union Finance Minister.
The COVID-19 pandemic, one of the biggest crises in human history, had a devastating impact on the economy. It had a huge adverse impact on the MSMEs too. A number of MSMEs had highlighted the difficulties being faced by them in the last two years due to the COVID-19 pandemic. To provide relief to the MSMEs, Government has in the last two years, announced many benefits for them, the finance ministry said in a statement.
As a follow-up to the relief measures announced earlier, the Ministry of Finance has decided to give additional benefits to MSMEs.
95 per cent of the performance security forfeited from such firms shall be refunded. 95 per cent of the Bid security (Earnest Money Deposit), if any, forfeited from MSME firms in tenders opened between February 19, 2020, and March 31, 2022, shall be refunded. 95 per cent of the Liquidated Damages (LD) deducted from such firms shall also be refunded. LD so refunded shall not exceed 95% of the performance security stipulated in the contract, the statement said.
In case any firm has been debarred only due to default in the execution of such contracts, such debarment shall also be revoked, by issuing an appropriate order by the procuring entity.
However, in case a firm has been ignored for placement of any contract due to debarment in the interim period (i.e. date of debarment and the date of revocation under this order), no claim shall be entertained, the statement added.
Notably, no interest shall be paid on the refunded amount.
According to the statement, as per the Office Memorandum issued by the Department of Expenditure to Secretaries of all the Ministries/ Departments of the Government of India and Chief Secretaries of all States and Administrators of Union Territories, relief will be provided in all contracts for the procurement of Goods and Services, entered into by any Ministry/ Department/ attached or subordinate office/ autonomous body/ Central Public Sector Enterprise (CPSE)/ Public Sector Financial Institution etc. with MSMEs, which meet the following criteria: The contractor/ supplier should be registered as a Medium, Small or Micro Enterprise with the Ministry of MSME, as of March 31, 2022. The original delivery period/ completion period was between February 19, 2020, and March 31, 2022.
The grant of relief will be monitored through Government e-Marketplace (GeM). MSME Vendors will be able to register on the GeM portal and enter details of the applicable contracts. The list of the procuring entities will also be available on the portal. The portal will notify the nodal officers of each procuring entity to verify the claim of the MSME vendor. After due diligence, the nodal officer will refund the due amount and update the portal with the amount, date and transaction details of the payment. The portal will also provide reports to track pendency with each procuring entity, the statement added.