Hit by the triple whammy of delay in GST refunds, unfavourable forex and end of trade privilege to Indian firms, the micro, small and medium enterprises (MSME) sector wants the government to offer incentives in the upcoming Union Budget so that it can cope with the tough times.
The industry body has proposed to the Finance Ministry to re-introduce some of the pre-GST era incentives and provide cheaper finance to meet capex and working capital requirements. It has also asked for lowering interest cost to 4-5 percent to make the industry competitive.
“After the roll-out of Goods and Services Tax (GST), all the incentives were withdrawn. The duty draw back was reduced, among other things. So we want some mechanism where the additional cost is offset and which is WTO (World Trade Organisation) compatible too. The government has to come out with some incentives. We also expect a lower rate of interest for the SME sector as the cost of finance is quite high this time,” said Animesh Saxena, President, Federation of Indian Micro Small & Medium Enterprises (FISME).
Asked if the much-publicised 59-minute loan scheme for smaller firms had helped, Saxena said that it had met with very limited success, adding that ease of finance was still a dream for many businesses.
Given that the MSME sector provides employment to a large number of youth, the industry is set to be the focus of the Union Budget.
A Confederation of Indian Industry (CII) survey earlier this year said that the MSME sector created 1.35 crore to 1.49 crore new jobs over the past four years. The additional jobs were created in spite of the negative impact of demonetisation and problems in the initial months of GST roll-out.
“The government should lower tax rates for firms with an annual turnover of up to Rs 25 crore. In fact, it should come out with a special package for the MSME sector,” said Chandrakant Salunkhe, founder and President, SME Chamber of India.