Indore: The state government has exempted micro, small and medium enterprises (MSMEs) from depositing earnest money in departmental tenders. The move is aimed at increasing the participation of small scale industries and resolving the delay in payments.

Small scale industries complained about earnest money being blocked and a delay in payments from departments which affected operations.

OP Dhoot, President, Association of Industries Madhya Pradesh (AIMP) said, “Recently the state government agreed to our demand to relax earnest money deposits from small scale industries. Industries used to face problems due to money being blocked and late refunds by various departments.”

According to AIMP, all small scale industries registered under the MSME department can avail exemptions from earnest money by declaring their registration numbers.

In Madhya Pradesh there are 45,000 small scale units of which a majority of them are in Indore region. 1700 small scale units registered with AIMP.

According to industrialists, earnest money in government tenders varies from 2 to 5 per cent.

Industrialists said, earnest money is returned after about three months, blocking the amount for months.

Captain V P Singh, member, MP Small Scale Association said, “It’s a good move but it will not help much. The implementation is very poor in government departments and only 10-20 per cent of government units provide earnest money exemption.”

Industrialists said due to lack of clarity, several industries are still unaware of the exemption.

Source: Times of India