Ease of Doing Business for MSMEs: Consortium of Indian Associations (CIA), a prominent MSME body representing around 50 MSME associations across the country, has urged the government to create a separate ministry for micro enterprises for better focus and policy support catering to micro entrepreneurs. The demand stems from the fact that over 99 per cent of enterprises in the MSME category are micro units, which have turnover less than Rs 5 crore, that aren’t comparable to businesses with turnover up to Rs 250 crore. According to the MSME Ministry’s 2020-21 annual report, of 6.33 crore MSMEs in India, 6.30 crore are micro enterprises, while 3.31 lakh are small units, and only 5,000 are medium businesses accounting for 0.52 per cent and 0.01 per cent of the total estimated MSMEs, respectively.
“How can we have the same lane on a highway for a cyclist and a lorry? That’s exactly what’s happening in the name of MSME. A company doing a turnover of Rs 1 lakh a month and Rs 20 crore a month are both called an MSME. All this is manageable when the going is good but surely not when there is chaos. Now we are unable to administer any stimulus or relief to any enterprise in the country even though we want to. For example, we offer the same stimulus scheme for a company engaged in running a salon or a transporter or a manufacturer, or an exporter or a training institute. Giving one medicine for all issues makes it impossible to expect any cure unless strong luck saves the patient,” KE Raghunathan, Convenor, CIA told Financial Express Online.
The association along with its members had conducted a survey in June this year covering more than 81,000 self-employed and entrepreneurs running micro and small businesses. The survey noted that 73 per cent of SMEs didn’t make any profit during the FY21 while 88 per cent of respondents were yet to avail any of the stimulus packages introduced by the government.
To support micro enterprises recovering from the Covid impact, the CIA also suggested the government to exempt the units from GST for two years along with exemption from PF/ESI for two years. Other key asks were unconditional moratorium of all types of loans below Rs 2 crores to start EMI payments from 2022 September onwards and till then the interest to be in line with RBI Repo interest, immediate clearance of all pending dues payable from central public sector units, state undertakings, and corporates, offer additional loans to any micro enterprises that seek funds without any eligible conditions up to 50 per cent of their current facility, waive from Capital Gains tax for the sale of factories to settle loans and to reinvest in the business, open Fair price shops and offer raw materials at fixed prices for one year and with credit terms to micro Entrepreneurs, etc.