MSME Working Capital: Nageswaran on Timely Payments

New Delhi, May 12 (PTI) Large companies must ensure timely release of payments to micro and small enterprises to ease their working capital needs and reduce cost of funds, Chief Economic Advisor V Anantha Nageswaran said on Tuesday.

Speaking at the CII Annual Business Summit, Nageswaran said large companies should accept invoices presented by micro, small and medium enterprises and make payments on time.


"Larger enterprises in the country have to pledge to contribute to relieving the working capital requirements of micro and small enterprises. Micro, small, and medium enterprises are the source of working capital for large enterprises. It should be the reverse. And because these enterprises have a much higher cost of capital," Nageswaran said.

Freeing working capital for MSMEs would create a "successful, positive bandwidth" in terms of innovation, Nageswaran said. India has a huge pool of MSMEs with many struggling to scale up and integrate better into the global value chain.

He said the government has made efforts to create a conducive ecosystem for MSMEs to grow and policymakers across the different wings of the government must make regulation for MSMEs simple, transparent, and trust-based.