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Last updated: 03 Mar, 2015  

Budget.9.Thmb.jpg Union Budget: MSMEs deserve more attention

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Bikky Khosla | 03 Mar, 2015

The Budget is over. During the last few weeks we discussed a number of issues facing the micro, small and medium enterprise sector. The expectations were high and if we compare them now with what has been offered in the Budget 2015, we will obviously find a number of pain points. There are no big bang reforms and not enough tax sops. Increase in service tax, cut in MSME ministry budget for some key schemes, lack of specific guidelines on skill development are some striking drawbacks.

On the other hand, it will be wrong to say that the Budget is all about negatives. We all know that availability of low-cost credit is critical to growth of the MSME sector and the decision to set up Mudra Bank with a corpus of Rs. 20,000 crore is a welcome one in this regard. Similarly, it is encouraging to see allocation of Rs 1,000 crore for technology start-ups. In addition, a credit guarantee fund of Rs 3,000 crore will help small business units to fight their funding needs to some extent.

There is another positive measure the Finance Minister states in his Budget speech: the government will unveil a comprehensive Bankruptcy Code by 2015-16. The new code will meet global standards and provide necessary judicial capacity. Such a step will certainly contribute to the improvement of the business environment. In addition, the proposal to help MSMEs get rid of the irritating problem of delayed payment by setting up a system for financing of their trade receivables is another good idea.

On tax front - although increase in service tax and absence of MSME sector-specific tax relaxation is unfortunate - I think the Finance Minister set a positive note on implementation of GST from April 1, 2016. In addition, the effort to move towards the new tax regime is also evident in some proposals for changes in the indirect tax system, such as subsuming of Education Cess and the Secondary and Higher Education Cess in Central Excise duty and permission to issue digitally signed invoices and electronic records. I hope the government will be able to undertake this transition in a systematic manner and the GST roll-out will not miss the deadline again.

In addition, what I view as another big positive of the budget is the proposal to increase allocation for capital spending in the infrastructure segments. This will not only help the industry, including the MSMEs, but will also have a very positive impact on our socio-economic scenario. In addition, the proposal to widen the social security net through insurance and pension schemes is another praiseworthy move. The relaxed fiscal target also sounds logical as it will give some room to hike infra spending and meet the Finance Commission’s recommendations to transfer more revenue to the state governments.

Overall, the Budget seems a balanced one, but having said this I still want to repeat one thing again - it clearly falls short of the struggling MSME sector's expectations, and I hope some strong initiatives will be announced in the course of the year to adequately compensate for this. I invite your opinions.

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No representatives from the industries
O.P.Khandelwal Indore (M.P.) | Wed Mar 11 06:13:24 2015
Actually what happened, at the time of making policies for MSME Industries, only bureaucrat & some leaders are taking decision, no representatives from the industries level invited, who knows the actual difficulties faced by the industries, nor any suggestions from the Major Industrial Associations are invited. taking decision as per his convenience, nor as per requirement of Industries. This is the mail problems, why India is not growing as fast as China. Before making policies for any level, Govt. must invites suggestions & make decisions according to major suggestion. The same problem is facing by the common man, what ever policies are making for common man is seating in the AC Room, and/or suggested by the leader and /or seating in the room & called 10-12 men & make policies, according to the suggestions of the 10-12 men. This is totally wrong, Govt. must make survey among the common men at the spot , what difficulties are facing by them & according to this survey , takes decision for the common men. This is the facts.

provide facility to increased Business MSME
Rajendra Maurya - AEGIS Projects Technology Pvt ltd | Sat Mar 7 07:03:46 2015
Regards Of Financial crisis and Financial short fall By MSME and always fall down MSME , Its require to change Indian financial policy ( Set By RBI ) NPA rule .MSME ( Service Industry , Trading , Small Manufacture , consultant , ETC )having Short fall of money , because all these are depends on Heavy Industries ( Cement , Steel , Rubber , Auto mobile , Tires , Power , Etc ) and heavy industry near about past one and half years productions level have gone 50% less as per stander label , Effectively they do not want to services or material from MS ME , Ultimately MSME have not Fund to Run His Business , And MS ME have To pay Bank Interest and loan Within 90 days as per Rule By RBI ( N PA ) , So Now the Thinks is MS-ME Will arrange fund for run of his Business or He Should pay his dues , Now may Suggestion is for government and all Banking Industry to support all MSME and change N PA policy and waive of one year interest , For changing of Policy and waving of interest to help ME MS to grow and smooth running , when its come smooth running economy will automatically will grow .

MAKE IN INDIA. - Thesis.
c. Satishkumar | Wed Mar 4 06:04:29 2015
Thanks for calling the foreign companies to MAKE IN INDIA. Please Encourage the Indian Companies already Making in India by Allowing them to work more freely and to survive with lesser taxes and formalities. Let our companies grow and flourish, then seeing their success the foreign companies will automatically come here AND iNVEST AND to make things in india..... Am I Right, Please Correct me if I am Wrong..

Budget for MSME
Jayesh Rambhia | Wed Mar 4 02:29:30 2015
Liberalisation we have been hearing since 1990. Have not experienced it yet in existing MSME industrial unit. Competition is global.All licences & controls still the same. Upto a turn over limit of 1.5 crore excise is exempt. That limit has stayed same for over a decade. Even for exporting units , total local turnover including trading limit is 4 crore , its also not affected by inflation. Beyond this limits excise applies & goods become about 10% more expensive. Also MSME can not work for bigger brands without paying excise. This has taken away chunk of business away. Excise department is feared due to draconian arresting powers. Its entrepreneurs responsibility to prove innocence , till that time he is punished as guilty. How does a small unit can scale up & fight against big brothers from across borders, is not even thought out by govt. Congress capitalism was culprit , so we thought. With BJP following same lines , not much hope left for MSME units.

Budget 2015
Binod Kr. Sarda, Kolkata | Wed Mar 4 00:16:18 2015
10 years back, the Limit of Small Scale Industry was 1.5 Crores n today is also the same. Income tax Limit has been raised from say 1 lakh to around 4 lakhs above with exemptions. Dont the Finance Minister realise that this also needs a change as price of not a single commodity is same n hence the limit should be raise to at least 5 Crores?

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