New Delhi: Finance Minister Nirmala Sitharaman will present the Union Budget on February 1, 2022. Micro, Small and Mid-size enterprises (MSMEs) are requesting the government to provide special focus to recover the sector, reduction in GST, relaxation in compliances, address the issue of delayed payments, and ease of access to capital, among others.
Rahul Raj, Founder & CEO FloBiz, said, “We expect a special focus from the government to help MSME sector recovery and accelerate overall economic growth. This can come in the form of funding support to NBFCs to maintain liquidity & promote financial inclusion with a distinctive focus on MSMEs under priority sector lending. In addition, reduction in GST rates and relaxation in compliance burden for MSMEs around taxes, audits & loans will go a long way in helping this sector regain its lost momentum.”
Dr Arun Singh, Global Chief Economist, Dun & Bradstreet, also listed out several demands of the MSME industry. While speaking on the issue of delayed payments, he said, “Since the launch of MSME Samadhaan in Oct 2017, only 22% of the applications have been either disposed or mutually settled. While 21% of the applications have been rejected a whopping 57% of the applications are either currently under consideration or yet to be viewed by the council.”
Singh also urged for ease of access to capital, saying that the government should take measures to operationalise the Fund of Funds scheme on a fast-track mode. He also suggested strengthening the export infrastructure. “Exporters should be incentivised to use business information portal since the probability of a firm exporting to new markets increases by around 0.1% with each additional day of time spent on such portals,” he added.
Meanwhile, Gunish Jain, CEO, BlueKaktus, said, "TDS has been a point of concern across the industry. Currently, a TDS of 10% assumes profitability of 40% which is generally not the case for corporations. With a major chunk of capital being held back in the form of TDS, maintaining big cash flow becomes a challenge. SMEs find it challenging to secure loans as most of their money is blocked by the government in the form of TDS. In my experience, the TDS needs to be trimmed down to 7.5% for all whereas for SMEs it should be further reduced to 2.5%.”
He further adds, “Amongst exporters too, the cash flow issue persists when it comes to GST refund. The current process of collecting and then refunding leads to massive cash flow issues in the industry. I believe that the government should revise the existing GST refund timeline and devise a mechanism to automatically refund the money within 45 days of a filed request. Moreover, fixing a date on the refunds can help companies align their business objectives accordingly.”
Also, Avneet Singh Marwah, CEO at SPPL, Exclusive Brand Licensee of Blaupunkt in India, pointed out that “As we are going through another wave, this is an indication of how important Atma Nirbhar Bharat is. To boost Indian manufacturing and MSMEs, we need a stable GST tax slab. No product should be above the 18% slab, and they must now encourage consumerism in order to improve market sentiment.” Also Read: Budget 2022: Salaried class expect Rs 50,000 WFH bonus; tax slab, standard deduction changes
“By doing this, India could become the world’s third-largest market for television. The market size could grow by 15% each year, reaching 16 million units. We urge the government to not change any customs duties for the time being, as the industry is moving towards stable conditions,” Marwah added. Also Read: Digital payments record 40% annual growth at Sep-end 2021: RBI data
Pankaj Sharma, Chief Executive Officer (CEO), Religare Finvest Ltd said that the Government must urgently take measures to meet MSME lending requirements, subsidizing the cost of funds to NBFCs (irrespective of their size and rating) that focus on lending to small merchants for loans as that will be a way to ensure easy access to credit.
He added that the government should also consider the demand of MSME sector to rationalize the GST rates across all essential goods, services and inputs to other critical items.
"Overall nominal incidence of GST on manufacturing may be rationalized from 18% to 12%. It will go a long way in giving inflation relief to MSME units and strengthening their balance sheets," said Rahul Garg, CEO and Founder, Moglix.
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