Proposed definition of MSMEs not beneficial: KASSIA

Basavaraj S Javali, president of the Karnataka Small Scale Industries’ Association (KASSIA), has said that the proposed definition of micro, small, medium enterprises (MSME) was not beneficial.

Speaking to reporters, Javali said that, as per the MSME Act 2006, MSMEs in India were defined on the basis of investment in plant and machinery. “Recently, however, the Union Cabinet has come up with a draft revising the definition completely and making turnover the basis for the definition. As per the proposal, the classification defines micro units as having Rs 5-crore turnover, small units as having turnover of Rs 5 crore to Rs 75 crore and medium units as having Rs 75 crore to Rs 250 crore,” he added.

“The proposed definition will bring in a large number of firms within the definition of SME. This is a matter of serious worry as there will be demand for benefits from the government for SMEs and many will not get the benefits,” he explained further.

The proposal is in draft stage and requires amendments to be made to the MSME Act before being passed in the Parliament. It is likely to be placed for discussion in the winter session of the Parliament, which is to begin on December 11, said the president.

“The KASSIA has already met the Union minister and urged him to drop the proposed definition of MSMEs,” added Javali.

He also urged the Union government to make subsidised funding available to SMEs up to a sum of Rs 5 crore.

‘Exempt GST’

Javali said that job works were earlier exempted from payment of tax under the VAT. “With the introduction of GST, however, labour charges have been taxed at 18%. This has been causing a lot of problems to micro and small units, who are the main players in the service for larger units,” he pointed out.

“A delegation from KASSIA will meet the Union minister shortly and urge the government to drop the 18% GST. The delegation will also request to bring the labour charges under the 5% bracket of the GST or exempt the units of GST altogether. The issue has also been discussed with M Veerappa Moily, head of the Parliamentary Standing Committee on Finance,” said Javali.

He, however, alleged that the schemes related to MSMEs announced by the Centre has not been implemented properly.

Better facilities

The president urged the authorities to strengthen infrastructure and also develop additional land for industries at the Baikampady Industrial area.

“Baikampady needs to be developed into an industrial township with necessary upgrade of infrastructure as well as the management framework. There is a need to create housing facilities in the industrial areas for the benefit of the workers,” listed out Javali.

He urged the KIADB to look into the development of new industrial areas in the district in other places too. Multi-level industrial estates can be developed to accommodate MSMEs, he added.