Expectations by MSMEs in forthcoming Union Budget (2015-16) - By Narinder Bhamra

The Budget is ahead and MSMEs expectcall for stronger support for the micro, small and medium enterprise sector. Over the past few weeks we have discussed a number of challenges facing the sector and measures that are considered urgent for addressing them. Budget recommendations by FMAI have been forwarded to the MSME ministry & were conveyed to Minister of State for MSME - Govt. of India - Giriraj Singh. Finance minister Arun Jaitley will present the Union Budget on Saturday and ahead of it, we expect redressal of some major issues and priorities for the MSME sector.

Lack of availability and high cost of credit, is one of the biggest hurdles. The Finance Minister has to find ways and means to address this problem. MSMEs urgently needs steps to incentivise banks into giving MSME loans, make it compulsory for banks to extend a certain percentage of total assets as loans to the sector, implement strictly the Credit Guarantee Scheme for collateral free loan, and encourage more and more businesses to participate in the SME exchange. Most importantly, any policy measure taken in this direction must be supported by implementation in the right manner.

As per as taxation is concerned, burden on the MSME sector can be eased significantly by measures like increase in exemption limit of excise duty, reduction in central sales tax, rebate in income tax, increase in threshold limit of levy of service tax, etc. Similarly for firms involved in exports, steps to ensure faster payment of duty drawback and central excise rebate claims, continuation of the duty drawback scheme, removal of MAT and DDT on SEZs, bringing of export under priority sector lending, etc. should be introduced in the Budget.

Some other major areas to look into would be revisiting the MSME definition by including parameters such as turnover and employment for defining them, setting up of specialized funds for start-ups, easier exit norms to facilitate easy exit for insolvent units, enforcement of 20% mandatory purchase from MSMEs, tax deduction on adopting new technologies, strict implementation of the MSMED Act clause for release of payments to MSMEs within 45 days, etc. In addition, efforts must be made to extend incentives for MSMEs under the newly launched flagship programmes like 'Make in India', 'Digital India' and 'Skill India'.

(The Author is President, Fastener Manufacturers Association of India.)