In a recent development, the Pune district administration has initiated action against the software company SoftTech Engineers in a case involving the recovery of ₹1.77 crore. This company, located on Baker Road in Pune, provides IT-based services.
The action against SoftTech Engineers has been taken due to their non-compliance with the orders related to payment from the MSMED Council. The MSMED Facilitation Council had filed a case in this regard, as a Bhopal-based IT service company, C-Net Infotech Pvt. Ltd., had not received payment from SoftTech Engineers.
The MSMED Facilitation Council, Madhya Pradesh, issued payment orders for ₹1.77 crore on September 27, 2023, which included the original amount of ₹1.55 crore along with interest. However, SoftTech Engineers did not adhere to these orders.
Despite the passage of the stipulated period without payment from SoftTech, the Pune district administration has initiated action against SoftTech Engineers Pvt. Ltd., following the recommendations of the MSMED Facilitation Council and the Bhopal Collector. They have issued a notice to make the payment within 7 days.
The significance of MSMEs in India
The delayed payments to MSMEs have led to uncertainty in the future of thousands of MSMEs in India. Both government and private organizations share responsibility for the issue of delaying payments to MSMEs. India has the world's second-largest MSME base, with around 6.3 crore MSMEs contributing 30% to the country's GDP and 50% to exports. It is estimated that an MSME provides employment to at least 10-15 people. The majority of employment in the country also comes from the MSME sector.
Recognizing the significance of MSMEs, the central government has taken measures to address payment-related issues, as timely payments are critical to the survival of such MSMEs. The future of these MSMEs is at stake due to the constraints of working capital.
Issue of payment backlog
According to a report by the Global Alliance for Mass Entrepreneurship (GAME), India is facing a payment backlog of approximately ₹10.7 lakh crore in MSMEs. This backlog has affected companies in the public sector, government departments, and large corporates.
To address the issue of MSME payment delays, the government has enacted the MSMED Act 2006 and established the MSMED Samadhan Portal, but the problem remains unresolved. Pune District Administration Takes Action Against SoftTech Engineers Over ₹1.77 crore Payment Delay"
