Credit and finance for MSMEs: Chennai-based MSME body Association of Indian Entrepreneurs (AIE) in its budget suggestions to the government has sought a one-time settlement (OTS) credit support for MSMEs keen to wind up their present unprofitable business. It also sought fresh loans for those interested in reinventing or refurbishing or diversifying their existing business without insistence on CIBIL score and mandating at least 25 per cent of the loans by any bank branch to such micro entrepreneurs. The ask is intended to serve first-time borrowers who were left out of the ECLGS scheme ambit.
AIE, which has 3,500 MSME members, also requested for restructuring of all existing MSME loans required by entrepreneurs with a fixed term of one year of moratorium and two years additional timeline to repay term loans. This includes NPA businesses and those recovering, if the entrepreneur is confident of repaying the loans taken, at least in the cases where they are fully secured, or credit guaranteed by the government.
It also suggested abolishing Capital Gains Tax to enable micro entrepreneurs to sell their property for regularising their loan accounts, settle their suppliers and reinvest in the 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 must pay up to 20 per cent long-term capital gain tax to the government. This is sizable when their property is more than 10 years old,” the association headed by KE Raghunathan noted. Raghunathan was the former president of the All India Manufacturers Organisation.
Moreover, to solve the challenge of lack of raw material availability at the right price, AIE requested National Small Industries Corporation (NSIC) to implement a Public Distribution System (PDS) like ration card system for micro enterprises to supply essential raw materials at a fair price and in small quantities at least at industrial estates and parks to start with and make them available on credit basis.
Among other key recommendations by AIE were:
- Increasing GST exemption limit for micro entrepreneurs to up to Rs 2 crore.
- Setting up GST Tribunal in every state and helping entrepreneurs with fast-track resolutions and from the harassment of notices.
- Exempting micro enterprises from the payment of income tax for FY23 and FY24 so that they can use the profit earned for reinvestment and furthering market exploitations.
- Offering micro exporters insurance coverage with a stable exchange rate for one year to save them from the fluctuation of currency rates.
- Devising an urban MGNREGA-like scheme for those employed as interns in MSMEs for a period of 180 days with a stipend of Rs 6000 per month to support them in gaining experience and enterprises in getting interns to help them survive tough times without financial strain.