Consortium of Indian Associations (CIA), a 30 member group of micro and small industry associations, has asked for a 'fair price' shop kind of arrangement to provide raw materials at low cost for MSMEs.
In a submission before Finance Minister Nirmala Sitharaman on February 20, CIA pointed out that the biggest concern for MSME at the moment is availability of raw materials in time and at reasonable price." Traders are rigging the market with their whims and fancy pricing. The National Small Industries Corporation (NSIC) must implement a PDS like ration card system to micro enterprises for supply of essential raw materials at fair price and in small quantities at least at Industrial estates and parks to start with and make them available on credit basis", says K.E.Raghunathan, convenor, CIA.
The consortium also sought government help to get 'sale price' competitive and lowered, and requests for exemption of GST for all enterprises coming under micro (up to Rs 5 crore turnover) till March 2022. "It will save micro enterprise owners from going to third party agencies for filing and documentations and allow them to concentrate more on business. The interest on delayed payments is very high and needs reconsideration. Request for waiver or samadhan scheme from July 2017 due to lots of technical glitches and revision of rates faced", Raghunathan said.
A third demand made by the CIA was permission to open 'Trade' accounts in banks (like savings and current accounts) for MSME and direct banks to act as an intermediary for supplies to corporates, PSU, government ministries and state departments to monitor delay in payments and to ensure settlement on the due date to the MSMEs.
An extension of all pending loans by one year with a base interest rate (repo rate) on outstanding for this year and chargeable from April 21 at normal interest was another submission. The association wanted a one-time settlement for those who are unable to revive and willingly want to close and restart with a value at 75 per cent of the principal value outstanding and waiver of all interest and penal interest due. "This can be one step ahead of the proposed Bad Bank concept and save from piling litigation, recovery costs and end of entrepreneur life," says Raghunathan.
The confederation also sought abolishment of long term capital gains tax for MSME units whose assets are sold during 2020-21 and 2021-22. "Many entrepreneurs are in bad need of funds for regularising their loan accounts, settle their suppliers and reinvest in business. The only asset they have is the land and building of the factory or any other immovable property including their place of stay or office. Presently even if they dispose at distress value, they have to pay up to 20% long term capital gain tax to the government", Raghunathan said.
According to CIA, it has been a long-pending demand with the Parliamentary Standing Committee on Finance also recommending in the past that tax on long term capital gains be abolished for all investments in MSME units.