Vivad se Vishwas Scheme I: Relief for MSMEs impacted by COVID-19

Where launched?

The scheme was announced in the Union Budget 2023-24.

Ministry: – Ministry of Finance

Launch Year: – 2023

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Objectives: –

The Ministry of Finance’s Department of Expenditure has introduced a program called “Vivad se Vishwas I – Relief to MSMEs” to offer assistance to Micro, Small, and Medium Enterprises (MSMEs) during the COVID-19 pandemic. The scheme aims to provide relief to MSMEs affected by the pandemic.

The target of the Scheme: –

To provide relief to Micro, Small, and Medium Enterprises (MSMEs) during the COVID-19 pandemic by refunding their performance security, bid security, and liquidated damages forfeited/deducted by government undertakings and government agencies. The scheme aims to ease the financial burden on MSMEs and promote their growth by returning 95% of the forfeited bid fee or performance security in case of the non-execution of contracts during the COVID pandemic. The Vivad se Vishwas Scheme I came into effect on 17.04.2023, and the deadline for submitting claims is 30.06.2023.

Beneficiaries: – MSME Industry

Eligibility for Vivad se Vishwas Scheme I

Under the “Vivad se Vishwas I – Relief for MSMEs” scheme, relief will be provided to Micro, Small, and Medium Enterprises (MSMEs) in all contracts for the procurement of goods and services by any department, ministry, attached/subordinate office, an autonomous body, Central Public Sector Enterprise (CPSE) or public sector financial institution, etc., provided that the MSME meets the following criteria:

1. The supplier or contractor must have been registered as an MSME with the Ministry of MSME as of 31.03.2022.
2. The original completion or delivery period of the contract falls between 19.02.2020 and 31.03.2022.

This relief aims to provide support to MSMEs impacted by the COVID-19 pandemic and help them overcome the financial difficulties caused by it.

Benefits Offered by the Vivad se Vishwas Scheme I

The Ministry of Finance has announced that eligible Micro, Small, and Medium Enterprises (MSMEs) will receive the following benefits under the “Vivad se Vishwas Scheme I”:

1. 95% refund of the performance security forfeited from the eligible MSMEs.
2. 95% refund of the bid security (earnest money deposit) forfeited from MSMEs in tenders opened between 19.02.2020 and 31.03.2022.
3. 95% refund of the Liquidated Damages (LD) deducted from MSMEs. The refunded LD cannot exceed
4. 95% of the performance security stipulated in the contract.
5. 95% refund of the risk purchase amount.
6. If an MSME has been debarred due to a default in executing contracts, the procuring entity will revoke the debarment by issuing an appropriate order. However, no claims will be entertained for contracts that were not awarded to the MSME during the debarment period.
7. The refunded amount will not incur any interest.

These benefits are intended to provide relief to MSMEs impacted by the COVID-19 pandemic, alleviate their financial burden, and promote their growth.

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