FASII submits points on present economic scenario to Chief Advisor to PM

Author(s): City Air NewsFASII (Federation of Associations of Small Industries) national president Badish Jindal. New Delhi/Ludhiana, September 4, 2013: FASII (Federation of Associations of Small Industries) national president Badish Jindal...

FASII submits points on present economic scenario to Chief Advisor to PM

FASII (Federation of Associations of Small Industries) national president Badish Jindal.

New Delhi/Ludhiana, September 4, 2013: FASII (Federation of Associations of Small Industries) national president Badish Jindal has submitted certain points with reference to the present economic scenario to T.K.A. Nair, Chief Advisor to Prime Minister of India on Wednesday at PM’s Office in South Block, New Delhi.

The text of this submission is as under:

“We, at the outset, profusely thank you for the opportunity given to the Micro, Small and Medium Enterprises Sector particularly to FASII to submit their views with reference to the present Economic Scenario.

1.         We may state that after the Global Recession during 2008-09, despite our best EXIM Policy, the Nation’s Trade imbalance continues to affect the economy. From the year 2009-10, the Trade Balance stood at 109.62 billion dollars which rose to 190.34 billion dollars in the year 2012-2013.  The flow of FDI and FII is not more than 90 billion dollars.  Under such circumstances, we have to curb imports.  We, therefore, suggest the following measures.

(a)        In view of the rising and inflationary value of dollars, an ad-hoc additional duty of 10% needs to be imposed on all the products other than petrol and petroleaum products.  For luxury items it should be 30%.

(b)        Our imports from China has shot up from 30 billion dollars to 52 billion dollars in just three years.  Whereas the exports to China has increased from 11.62 billion dollars to 13.5 billion dollars during the same period. The imports from China are mainly finished goods.  And the exports are mainly raw-materials. In this regard we may point out that the items reserved for manufacture in the Micro and Small Enterprises sector and the items reserved for procurement from the said sector are freely flowing into Indian markets.  This imbalanced trade has forced many micro and small enterprises in the country to down their shutters.  The Government needs to arrest this trend. 

(c)        All the items, mainly, items of Micro & Small Enterprises(MSE) have started coming through imports from Bangladesh and Sri Lanka under SAFTA.  Majority of these items are Chinese-made but have the trade-mark of Bangladesh and Sri Lanka. This factor has terribly hit the domestic Micro and Small Enterprises. It is suggested that the imports into these countries may kindly be monitored and if they are reexporting, then stringent action should be taken against this trend.

(d)       Almost all the engineering items do not bear any floor-price.  Therefore, materials are flowing at under-invoice value which affects the exchequer as well as the domestic manufacturers.  A committee needs to be set up to fix the floor-price value of all the engineering items keeping in line with the inflationary trend.

(e)        Our Oil imports Bill is continuously increasing giving a tough time to the National Economy.  Under such circumstances, it is requested that Bicycle, which is a good alternative to other vehicles may kindly be exempted from payment of central duties.

(f)        It is known that the majority of the Bicycle and Parts manufacturers are in the MSME sector.  The Research Studies Report of July 2012 of the Deptt. Of Industrial Policy and Promotion clearly states that the bicycle industry is facing a cyclone owing to the cheap imports from China. The Union Government in the last budget gave a very good support to this sector  by increasing the import duty on bicycle parts at the rate of 20% and on complete bicycle at 30%. However, now these countries are sending materials at under-invoice which results in extreme loss to the industry as well as to the government. It is, therefore, earnestly requested that the floor price on imported Bicycle or parts should be fixed at more than Rs.150/- per KG. This will arrest cheap imports and save the industry from their dire straits.(Note: the price of bicycle in India stands at Rs.3000 to Rs.4000 - as per the procurement rate of State Governments - and the average weight of bicycle is 15 to 20 KG. So the average price of the bicycle comes to Rs.150/- per KG). To save the domestic industries, the European Union imposes 48.5% import duty on the bicycle and bicycle parts industries. We suggest that the antidumping duty should be imposed on the Chinese imports like European Union.

(g)        In order to eradicate unemployment in rural areas, schemes like MNRGA were introduced.  We feel that in such areas cottage industries could be promoted and developed.  Therefore, a fresh negative list of imports by including such items of cottage industries is required.

(h)        The process of implementing anti dumping duty is a very tedious and protracting. .  Most of the affected units are in the Micro and Small Enterprises sector.  These manufacturers are unable to follow the procedures of the antidumping duty.  Necessary assistance should be given to the MSEs in this regard.

2.         Procurement Policy and States implementing Central Government Schemes:

It is known that all the State governments are implementing many of the Central Government schemes. Under the provisions of the Central Schemes, the State governments are procuring the items under their own norms and ignore the 20% procurement policy of the Union Government.  The governments of Karnataka and Tamil Nadu have put-up such conditions that only large enterprises can supply the items.  For example, for procuring bicycles for school-going children, they had put up a clause of turnover of more than Rs.100 crores which resulted that only four companies in India were able to supply and the others were kept off the net.  Also, their procurement price was 20% higher than the procured price of states like Punjab who allowed the MSMEs to participate in such schemes.

It is suggested that for the Central Schemes, the Procurement Policy of the Union Government should be followed. And, a procurement monitoring committee may be formed to look into the price aspect.

3.         An Authority like BIFR to Tackle Sickness in MSMEs:

It is known that when a business of the Micro or Small Enterprise fails, not only do the assets of the business but the entrepreneur’s personal assets also get attached to pay off business dues. Presently identification and declaration of sick micro & small units is with the banks. It has been experienced  that normally banks do not take timely steps to identify sickness. Recommendations of State Level Committee also are seldom honoured by the concerned Banks.  Hence it is necessary that the identification should be done by a separate agency. Nayak committee has already recommended for formation of an authority on the lines of BIFR.  As soon as large industries apply to BIFR after erosion of 50% or more of their net-worth, they immediately get protection. No pending liabilities of MSE sellers of goods can be realized from them, and tax arrears etc. are also frozen. Such protection is not available to sick MSEs. Even the ESI and EPF recoveries are stalled once the large units apply to BIFR.  However, the Micro and Small Enterprises have to continue paying the ESI and EPF dues even during their heightened sickness. It is therefore requested that an authority on the lines of BIFR be formed with reference to sick Micro and Small Enterprises which will help them to come out from their dire-straits.

4.         Implementation of the Recommendations of the Prime Minister’s Task Force:

The Prime Minister’s Task Force under your esteemed Chairmanship has given very suitable and practical recommendations for the promotion and development of the MSME Sector.  Many of the recommendations  still remain unimplemented.  It is requested that the recommendations should be implemented at the earliest.

5.         Committees attached to Ministries and Government Organisations:

It is observed that just to fulfill the norms, many committees are formed at each ministry.  However, the meetings are not conducted in time and their recommendations are normally ignored.  It is requested that the needful should be done in this regard.

6.         Women Entrepreneurs:

In India only 5% of the enterprises are owned by women entrepreneurs. Whereas, in the other economies such as China and Europe, more than 25% of the enterprises are owned by women.  It is suggested that more women enterprises should be promoted through concessional aspects from Direct and Indirect Taxes and through simple and tailored procedures for setting enterprises by women.

7.         MNREGA:

This scheme was introduced by the Government to tackle unemployment in the rural areas.  Whereas the Industry feels the pinch of scarcity of labour in their enterprises.  Owing to this scheme, the workers remain unskilled throughout their life.  It is, therefore, suggested that this scheme should be restricted only to ladies and elders in the villages.  The men should be trained to become skilled in the rural industries.  Therefore, this scheme should be made applicable through industries in the rural areas.

8.         Implementation of GST:

Implementation of GST is getting delayed.  The same needs to be expedited.  The delay creates procedural difficulties with reference to scarcity of CST Forms in various States.  After 2010, the reduction in CST was not continued and still it stands at 2%.  This remains a big hurdle in inter-state transactions.  It is suggested that till the implementation of GST, the CST should be removed and the same should be amalgamated with State taxes.

9.         Uniform Tax Rates on Petroleum Products:

Petroleum Products should be kept under the category of declared goods so that a maximum cap of local taxes could be fixed in all the states.”

Wednesday, September 4, 2013