Budget 2018: On February 1, Modi government will announce one of the most anticipated budgets of its tenure. Along with the major industrialists and the common man, many individuals from the SME or Small and Medium Enterprises will be glued to the updates given by finance minister Arun Jaitley. With SMEs creating more jobs in the market with respect to the amount of investment required, union budget should ensure the interests of this sector.
As per the pre-budget memorandum by FICCI, industries such as Textile has seen enough initiative by the government, Under Integrated Textile Parks (SITP) scheme, Textile Parks are developed are in pipeline. However, these Textile Parks under SITP Scheme and are on the same business model as seen in the Industrial Parks developed by the State Industrial Development Corporation (SIDC). This makes it difficult for the people working in the MSMEs as after the implementation of the GST or Goods and Services Tax, ‘Real estate services’ is kept at 18% under the new tax reform.
However, FICCI noted that Modi government had given 77 exemption from the whole of GST leviable on “One time upfront amount” leviable in respect of the service, by way of granting long term, that is thirty years or more for the lease of industrial plots by the State Government Industrial Corporation (SIDCs) to industrial units. But things changed a bit on October 6 last year when FICCI noted that the GST Council held a meeting and decided that “Exemption will be provided to upfront amount payable in respect of granting long term lease of thirty years, or more of industrial plots or plots for development of infrastructure for financial business, provided by the State Government Industrial Development Corporations/Undertakings or any other entity having 50% or more ownership of Central Government, State Government, Union Territory to (a) industrial units or (b) developers in any industrial or financial business area”.
FICCI also noted that under SITP the park owner does not belong to the Central Government, State Government or Union Territory but 40% of the project cost is funded by the Government in the form of either equity or grant to establish the Parks. As per the scheme, the funding by the Government in the textile park would be generally in the form of grant and even where it is in the form of equity, the combined equity of Government of India, State Government/ SIDC (if any) cannot exceed 49% in the SITP.
In its pre-budget memorandum, FICCI has recommended that scheme of interest subvention now known as Interest Equalisation Scheme should be provided by Government to MSMEs in general as currently provided in case of Pre & Post Shipment Rupee Export Credit only. The reduced rate of interest would help the units which are generally driven by individual or small entrepreneurs. This would encourage the growth of the entire MSME sector.