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 Government has launched the 'Vivad Se Vishwas I - Relief to MSMEs' scheme, which it had announced in the Union Budget for 2023-24, to provide relief to small and medium enterprises for the Covid-19 period.

The scheme commenced from April 17 and the last date for submission of claims under it is June 30, 2023.

Finance Minister Nirmala Sitharaman while announcing the scheme during her budget speech on February 1, 2023, had said that in cases of failure by MSMEs to execute contracts during the Covid period, 95 per cent of the forfeited amount relating to bid or performance security will be returned to them by government and government undertakings.

This will provide relief to MSMEs, she had said.

Covid-19 pandemic had a devastating impact on economy, especially MSMEs and under the scheme, the relief being provided to such enterprises is aimed at promoting and sustaining the sector, official sources said.

Under the scheme, ministries have been asked to refund performance security, bid security and liquidated damages forfeited or deducted during the Covid-19 pandemic. Certain relief has also been provided to MSMEs debarred for default in execution of contracts during the Covid-19 period.

The finance ministry through this scheme has decided to give certain additional benefits to eligible MSMEs, affected during the Covid-19 period like refunding 95 per cent of the performance security forfeited earlier during the pandemic.

Also it would refund 95 per cent of the liquidated damages deducted earlier, while 95 per cent of risk purchase amount realised shall also 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), then no claim shall be entertained. Also, no interest shall be paid on such refunded amount.

Also, relief will be provided in all contracts for procurement of goods and services, entered into by any ministry or department attached with MSMEs.

The relief though would be provided only if these entities are registered as a medium, small or micro enterprise as per relevant scheme of the MSME ministry on the date of claim by supplier or contractor.