Today, the Micro, Small, and Medium-Sized Enterprises (MSMEs) received significant relief from the Ministry of Finance for the COVID-19 term. Ministries have been instructed to return performance security, bid security, and liquidated damages forfeited or deducted during the COVID-19 pandemic, according to a Department of Expenditure order (https://doe.gov.in/sites/default/files/Vivad%20Se%20Vishwas%20I%20-%20Relief%20for%20MSMEs.pdf). The directive was given as a follow-up to the “Vivad se Vishwas-I” scheme that the Union Finance Minister had previously proposed in the Budget Speech for 2023–2024. She had stated that her Budget Speech Paragraph 66.
The government and government undertakings would reimburse 95% of the forfeited amount related to bid or performance security to MSMEs in circumstances where they fail to fulfil contracts during the COVID term. MSMEs will benefit from this.
One of the worst catastrophes in human history, the COVID-19 pandemic, had a catastrophic effect on the economy. It also had a very negative effect on MSMEs. A number of MSMEs had underlined the challenges they had encountered in the previous two years as a result of the COVID-19 pandemic. The government has announced numerous perks for MSMEs over the past two years in an effort to help them. Following the preceding relief measures, the Ministry of Finance agreed to provide MSMEs with the additional incentives listed below:
The performance security relinquished from such enterprises will be reimbursed to the extent of 95%.
In tenders opened between 19.02.2020 and 31.03.2022, 95% of the bid security (Earnest Money Deposit), if any, forfeited from MSME enterprises would be reimbursed.
Additionally, the Liquidated Damages (LD) deducted from such enterprises will be reimbursed at a rate of 95%. The amount of LD so refunded shall not be greater than 95% of the contractually required performance security.
If a company has been barred only for performing poorly on such contracts, the procuring organisation must also revoke that debarment by issuing the proper order.
However, no claim shall be recognised if a firm has been passed over for the placement of any contract because of debarment in the interim period (between the date of debarment and the date of revocation under this order).There won’t be any interest added to this refunded sum.
Relief will be offered 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., in accordance with the Office Memorandum issued by the Department of Expenditure to Secretaries of all the Ministries/ Departments of Government of India, Chief Secretaries of all States, and Administrators of Union Territories.
As of 31.03.2022, the contractor or supplier must be registered with the Ministry of MSME as a Medium, Small, or Micro Enterprise.
The first delivery/completion window was from 19 February 2020 to 31 March 2022.
The Government e-Marketplace will be used to track the relief grant (GeM). MSME Vendors can register on the GeM site and enter information about the relevant contracts. The webpage will also include a list of the procuring entities. Each procuring entity’s nodal officers will be notified by the portal to check the MSME vendor’s claim. When everything is in order, the nodal officer will repay the overpayment and update the portal with the payment’s amount, date, and other transactional information. Additionally, the portal will include reports that track the status of each procuring entity.
The start date of the GeM process for applications for relief will be announced separately.
