The Central government has formally launched a scheme, “Vivad se Vishwas I – Relief to MSMEs” for providing relief to Micro, Small, and Medium Enterprises (MSMEs) during the Covid-19 period.

The scheme was announced in the Union Budget 2023-24 by Union Finance Minister Nirmala Sitharaman.

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The Department of Expenditure had issued an order on 6 February indicating the broad structure of the scheme.

Final instruction in this regard, extending the relief to cover more cases and relaxing the limits of refunds was issued on 11 April. The scheme commenced on 17 April and the last date for submission of claims is 30 June.

The relief provided under this scheme is in continuation of the efforts of the government in promoting and sustaining the MSME sector.

Under the scheme, Ministries have been asked to refund performance security, bid security and liquidated damages forfeited/ deducted during the pandemic. Certain relief has also been provided to MSMEs debarred for default in the execution of contracts during the pandemic period.

The Ministry of Finance, through this scheme, decided to give the following additional benefits to eligible MSMEs, affected during the COVID-19 period:

–95 per cent of the performance security forfeited shall be refunded;

–95 per cent of the Bid security shall be refunded;

–95 per cent of the Liquidated Damages (LD) deducted shall be refunded; and

–95 per cent of the Risk Purchase amount realized shall be refunded.

In case any firm has been debarred only due to default in execution of such contracts, such debarment shall also be revoked, by issuing an appropriate order by the procuring entity.

However, in case a firm has been ignored for placement of any contract due to debarment in the interim period (i.e. date of debarment and the date of revocation under this order), no claim shall be entertained.

No interest shall be paid on such refunded amount.

As per the Office Memorandum issued by the Department of Expenditure to Secretaries of all the Ministries/ Departments of Government of India and Chief Secretaries/ Administrators of Union Territories, 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. MSME could be registered for any category of Goods and Services.

The original delivery period/ completion period stipulated in the contract was between 19.02.2020 and 31.03.2022 (both dates are inclusive).

Government e-Marketplace (GeM) has developed a dedicated web page for the implementation of this scheme. Eligible claims shall be processed only through GeM.