CIA wants independent ministry for self-employed, micro businesses

The Consortium of Indian Associations (CIA) on Wednesday asked the Union Government to set up an independent ministry for self-employed and micro businesses to help address specific issues while batting for changes in the GST Act to make it "SME-friendly".

Complaining that micro entrepreneurs continue to be governed by complicated and outdated laws and dispensable compliance burden, the CIA also asked the government to revisit, scrap, or redraft these laws.

Releasing the result of a post-budget survey conducted among 1.08 lakh self-employed people, the CIA also proposed amending the Micro, Small and Medium Enterprises Development Act, 2006, to strengthen the state facilitation councils.

“Micro Small Enterprises Facilitation Centres should be given more power to conduct their proceedings in a transparent and time-bound manner and enforce payment of the specified interest to the aggrieved MSMEs," K E Raghunathan, Convenor, CIA, said. The respondents of the survey are manufacturers (52 per cent), service providers (10 per cent), self- employed (11 per cent), and exporters (9 per cent).

Also Read | Govt to launch revamped credit guarantee scheme worth Rs 9,000 cr for MSMEs: FM

As many as 87 per cent of the respondents believed the Union Budget 2023-2024 presented by Finance Minister Nirmala Sitharaman on February 1 was “disappointing". The survey found the performance of 72 per cent of the respondents as either stagnant or decreasing or stopped or wound up in the past five years.

“Only 28 per cent of the respondents have confirmed that they are growing. This is a warning sign,” Raghunathan said, adding that 76 per cent respondents said they are not making a profit currently while only 21 per cent respondents felt that the Centre supported MSMEs adequately during the Covid situation.

On the job front, 79 per cent of the respondents are expected to reduce or adopt a wait-and-watch approach or see no change in their employee strength this year while 21 per cent have expressed their interest in increasing the staff strength.

The report has stressed the need for the government to adopt a three-pronged approach towards SMBs -- Exempt, Protect and Support -- to mitigate the challenges being faced by the sector, at least for 12 months to recoup.

“The sector must be exempted from statutory compliances, penal actions, and litigation. It must also be given protection from the high interest burden, price wars, high cost of raw materials, losing employees, penalties, and late fees,” Raghunathan said. He added that MSMEs should be given liberal loans, offered moratorium with interest waiver and one-time settlement for those who want to wind up and restart.

On the main issues faced by the entrepreneurs, 79 per cent of the respondents felt that access to bank finance was their big issue while only 42 per cent cited profit margin concerns, and 70 per cent were concerned about delayed payment receipts.

"The revenue-sharing pattern between the enterprises and government should be refixed based on the turnover and profits to enable entrepreneurs to benefit and stay within the legal framework," the survey said.