Small businesses give the skip to govt fix for delayed dues

MSMEs fear long wait times, high costs at facilitation councils, turn to courts for relief

- Manas Pimpalkhare

Micro and small enterprises that face delayed payment issues from large businesses are shying away from resolving their disputes at the Micro and Small Enterprises Facilitation Councils (MSEFCs) and approaching courts instead to secure payments.

MSEFCs are state-run councils where micro and small businesses can file complaints against debtors and resolve the issue through arbitration and conciliation. However, with a low success rate, high costs, and long timelines for out-of-court dispute resolution, businesses are turning towards courts, where they can file civil suits to recover their payments.

These councils were established in 2017 in state capitals and other metropolitan regions under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006.

State governments must establish MSEFCs under the MSMED Act. As of March 2023, there were 152 MSEFCs in the country.