Budget 2012: Delayed GST major cause of worry for MSMEs, says IndiaMART CEO Dinesh Agarwal

The Economic Times,

NEW DELHI: With the Union Budget 2012-13 set to be presented on March 16, the micro, small and medium enterprises (MSMEs) sector is demanding that the government ensure facilities like conducive tax regulations, infrastructure, and easy finance to foster its growth.

Underlining his recommendations for the Budget, Dinesh Agarwal, Founder and CEO, IndiaMART.com, said, “The MSME sector, having contributed tremendously to the Indian economy, has always lacked requisite support from all quarters. The time is ripe to support and equip them to establish their strong foothold in domestic and international markets.”

“Many believe that credit crunch is the biggest worry for MSMEs. However, they overlook the fact that higher and multiple taxes and compliance with multiple departments are the key challenges for them due to their small setups and thin management. We request the honourable Finance Minister to simplify and unify taxation for MSMEs in this year’s Union Budget. Also, consolidation of multiple departments will help address issue of compliance. It will help MSMEs rise above pertinent issues of conforming to several norms and lengthy, time-consuming paper-work,” he added.

Agarwal also said the delay in GST implementation was a big concern for MSMEs.

“They fear that now it may get rolled out in a much complicated form, not in its original shape. To tackle this, a pragmatic approach towards faster implementation of GST is required,” he said.

Makrand Appalwar, CMD, Emmbi Polyarns Limited, Mumbai, also said that faster GST implementation was the most important requirement today and urged government to kickstart it at the earliest.

Agarwal added, “Essential infrastructural necessities such as land, power and connectivity may seem to be very basic, but in reality they are extremely crucial for MSMEs’ growth. For this, more industrial zones with reasonable land prices must be announced while continuous power supply must be made available to factories.”

Dinesh Kotian, Partner, Ace Heat Tech, said, “Expensive industrial land comes as a major hindrance along with high interest rates in company’s expansion plans. Steps should be taken to offer subsidized land and interest rates to SMEs. Also, a substantial number of SMEs have their setups in outskirts of cities. Unfortunately, basic infrastructural requirements like road connectivity, power supply, etc. are not in a good condition in such areas. Government should pay attention here as well.”

Agarwal praised government’s efforts for bringing effective policies that have helped build “communication infrastructure” in country in the last 15 years.

“What is now required is better and low-cost broadband services across the country, especially in tier-II and tier-III cities. This would allow MSMEs to utilize enormous business opportunities present online,” he added.

He said strong steps are required to free MSMEs from the credit crunch worry. Also, Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) needs to widen its ambit and cover more MSMEs which can avail collateral-free financing.

“We also look forward to extension of facilities (such as Zero Duty Export Promotion Capital Goods (EPCG), Status Holder Incentives, etc.) for exporters under Foreign Trade Policy till March, 2014 instead of the current time line i.e. March 31, 2012. This will encourage MSMEs to achieve higher export figures,” agarwal added.

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