India has close to 6.8 million Udyog Aadhar registered small and medium ventures today as per central government. According to the Finance Ministry, 50 per cent of India's exports that took place during the financial year 2019-20 were contributed by these MSMEs, which employs nearly 110 million people.
Small and medium-sized enterprises (SMEs) play a vital role in employment generation, export market and taxation in Indian MS industries and since the government is also an essential customer of all private entities, there must be a balance between both.
Indian SMEs find it difficult to get financial help from banks due to lack of collaterals. Governments can look at assisting by creating specific schemes for MSMEs.
In addition, they should create opportunities for MSMEs to understand the global market by letting them enter exports in order to expand and diversify. This will help in creating an encouraging environment for MSMEs and allow them to leverage respective professional services with ease for business growth.
Timely input tax submission acts as a backbone of an efficient GST system, which is only possible if all loops and the chain carry out timely compliance.
The government can also look at simplifying the GST laws so that it reduces compliance costs for MSMEs.
(The author is the Co-Founder of PagarBook)
Published 29 January 2021, 07:15 IST