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BW Businessworld

Big 'Small' Changes

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The Confederation of Indian Industry's (CII) Pre-Budget Memorandum for MSMEs has outlined  a comprehensive package for Micro, Small and Medium Enterprises that follows a ten point agenda.  Some of the salient features revolve around funding, technological support and policy implementation in this sector.
 
The industrial body is strongly in favour of streamlining policies and procedures for listing on SME Exchanges and synergising relationships between the small, medium and large industries .
 
Recommending that large industries could be entitled to tax benefits subject to the transaction having been completed -including timely payment to the SME supplier, as per the payment terms and conditions, agreed upon between the buyer and the supplier— the CII has also called for the extension of the applicability of the provisions of the Public Procurement Policy to state government ministries, departments and public sector undertakings and its strict implementation.
 
To mitigate the problem arising out of delayed payments to the MSMEs (and ineffectiveness of the current regulatory framework), CII suggests that while data may be available, accessing it has been very difficult, considering they are embedded deep inside the PDF documents with the MCA. With the introduction of XBRL, this process can be streamlined. There is a need to modify the reporting requirement of MSMEs by asking them to report receivables that they have from the large units. With XBRL data, the government can match the data and take immediate action signaling its concern towards MSMEs.
 
The CII agenda talks about the creation of different kinds of funds to encourage distinct aspects of the industry. These include the Branding and Export Marketing Fund for MSMEs and Environment Friendly Technology Fund which could be instituted to enhance self-reliance on energy and focus on environmental sustainability. There is a need to help MSMEs adopt a branding and technology focused approach.
 
There is a need for policy guidelines to encourage FDI participation by NRIs in the SME sector; this would include automatic approval for 100 per cent FDI from them. Some of the other policy measures include initiating a single window clearance, across all subsectors within the MSMEs.
 
With regard to industrial infrastructure, the CII recommends that a corporation should rent out facilities to MSMEs. It also proposes the withdrawal of Import Duty exemptions available to foreign suppliers of security features and the reinstatement of the benefits till the policy period 31.03.2014 for articles made out of vulcanised rubber.
 
According to Deep Kapuria, Chairman, CII National MSME Council, the MSME segment -which employs more than 59 million persons and contributes approx 40 per cent to manufacturing output - can truly emerge as a growth driver for the economy if the above issues are addressed in a proactive manner.