Years of unpaid Govt dues push local MSMEs to the brink: FCIK
Srinagar, Jan 27: The Federation of Chambers of Industries Kashmir (FCIK) has urged the J&K government to make an immediate, one-time budgetary provision in the forthcoming Budget to liquidate long-pending dues of Micro, Small and Medium Enterprises (MSMEs), warning that years of delayed payments have pushed local enterprises to the brink.
In a statement, the Valley’s apex industrial chamber appealed to Chief Minister Omar Abdullah to treat delayed MSME payments as an economic priority. FCIK expressed hope that the upcoming Budget would prioritise clearance of all outstanding dues, restore confidence among entrepreneurs, and signal that administrative lapses will no longer come at the cost of local industry.
FCIK said hundreds of MSMEs across J&K are facing collapse due to years-long non-release of payments by government departments, public sector undertakings (PSUs) and intermediary agencies, despite supplies having been made and works duly executed.
“Over the past several years, a large number of MSMEs have collapsed not due to inefficiency but because government dues remained unpaid for years, pushing otherwise healthy units into stressed accounts and Non-Performing Assets (NPAs),” the chamber said. It added that while banks have initiated coercive recovery actions under the SARFAESI Act against these enterprises, defaulting government departments continue to function without accountability.
According to FCIK, delayed payments have severely damaged the credibility of local entrepreneurs, leaving them mistrusted by suppliers, lenders and traders, and eroding the goodwill essential for business survival.
The chamber also condemned the justifications offered by some authorities for withholding payments, such as lack of administrative approval or technical sanction, despite official orders having been placed and supplies accepted. “Instead of fixing responsibility on officers who issued such orders, the burden has been unfairly shifted onto hapless MSMEs,” FCIK said.
Highlighting discriminatory contracting practices, FCIK noted that composite contracts awarded to outside agencies often carry favourable payment terms—including advances and milestone-based releases—while local MSMEs are forced to work entirely on credit. This unequal treatment, it said, has systematically weakened local industry and favoured outside players.
FCIK further pointed out that payments have been blocked in several cases on the pretext of investigations, PSU closures or mergers, including works under the SAUBHAGYA scheme, Jal Jeevan Mission and projects executed for J&K Projects Construction Corporation (JKPCC). “How can investigations or PSU restructuring become a licence to indefinitely withhold payments of innocent MSMEs?” the chamber questioned.
Emphasising that the forthcoming Budget offers a crucial opportunity, FCIK said a one-time clearance of all pending dues would ease cash-flow stress, revive confidence and demonstrate the government’s commitment to protecting local enterprises. The chamber also urged the Chief Minister to consider its recommendations for instituting an automatic, non-discretionary payment mechanism, cautioning that without systemic reform, delays will continue to suffocate MSMEs and undermine confidence.
