The COVID-19 pandemic has caused immense suffering across the world, and MSMEs and startups were no exception to this suffering. With the lockdowns and the economic slowdown, many of these small businesses were pushed to the brink of collapse. However, amidst all this gloom, there was a glimmer of hope. The Indian government, through the Department of Expenditure, Ministry of Finance, launched the Vivad se Vishwas scheme to provide relief to Micro, Small, and Medium Enterprises (MSMEs) for the COVID-19 period.
The scheme was announced in the Union Budget 2023-24 by Union Finance Minister Nirmala Sitharaman. In her budget speech, the Union Minister announced that in cases of failure by MSMEs to execute contracts during the COVID period, 95 percent of the forfeited amount relating to bid or performance security will be returned to them by the government and government undertakings. This would provide much-needed relief to Micro, Small, and Medium Enterprises (MSMEs).
The relief provided under this scheme is in continuation to the efforts of the government in promoting and sustaining the MSME sector. The Ministry of Finance, through this scheme, has decided to refund performance security, bid security, and liquidated damages forfeited/ deducted during the COVID-19 pandemic. The scheme commenced on 17.04.2023 and the last date for submission of claims is 30.06.2023.
What is the benefit of the Scheme?
Under this scheme, eligible MSMEs will get several benefits, including 95% of the performance security forfeited being refunded, 95% of the bid security is refunded, 95% of the liquidated damages (LD) deducted being refunded, and 95% of the risk purchase amount realized being refunded. Additionally, 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.
The government has also specified certain criteria for the relief to be provided. Relief will be provided in all contracts for procurement of Goods and Services, entered into by any Ministry/ Department/ attached or subordinate office/ autonomous body/ Central Public Sector Enterprise (CPSE)/ Central Public Sector Banks/ Financial Institution, etc. with MSMEs, which meet the following criteria: registered as a Medium, Small or Micro Enterprise as per the relevant scheme of the Ministry of MSME on the date of the claim by supplier/ contractor, and the original delivery period/ completion period stipulated in the contract was between 19.02.2020 and 31.03.2022.
The government e-Marketplace (GeM) has developed a dedicated web page for the implementation of this scheme, and eligible claims shall be processed only through GeM. This scheme is a boon for MSMEs and startups struggling to stay afloat in the wake of the pandemic, and it will provide them with much-needed relief to get back on their feet. The last date for submitting claims under the scheme is 30.06.2023, and MSMEs are encouraged to take advantage of this opportunity to get the relief they need.
The Vivad se Vishwas scheme launched by the Indian government is a welcome relief for the Micro, Small, and Medium Enterprises (MSMEs) which struggled during the COVID-19 pandemic. The scheme provides refunds for performance security, bid security, and liquidated damages forfeited during the pandemic period, and also revokes debarment for default in the execution of contracts. Eligible MSMEs can take advantage of this scheme by submitting their claims through the government e-Marketplace (GeM) before the deadline of 30.06.2023. This scheme is a step towards promoting and sustaining the MSME sector, which is a crucial contributor to the Indian economy.