(MENAFN- KNN India) With Union Budget 2016 to be revealed in just one month from now on February 29, MSMEs have pinned hopes on the government for some big announcements including inter-state GST, raising tax exemption limits to improve investment activity in the country.
According to the leading industry body for MSME associations, FISME, Budget 2016-17 is likely to be a pro-development and pro-business budget.
Anil Bhardwaj, Secretary General of Federation of Indian Micro and Small & Medium Enterprises (FISME), pointed five more important aspirations of the MSMEs that would help improve the investment sentiment in the country.
Bhardwaj said the Inter-state GST could be implemented prior to the full-fledged GST. Considering that the subject is in the central domain, the move does not require the Parliamentary approval.
Earlier, FISME, in its pre-budget consultation with the Finance Minister Arun Jaitley said that the move would be a "big step" towards helping the MSMEs.
In the proposal submitted to the Finance Minister for consideration in the Union Budget 2016-17, FISME said, "Lack of inter-state GST continues to be a major stumbling block in trading goods across states.
When supplying to governments, absence of inter-state GST puts suppliers of the buying state at a disadvantageous position vis-Ã -vis the suppliers of other states. With one of the largest share of public procurement in GDP, the impact of this aberration is immense. MSMEs are particularly affected adversely in the current dispensation."
Further, Bhardwaj pitched in for a need to have an investment allowance on Capex Section 80-I without any lower threshold stating the move will help MSMEs.
Seeking to have incentive for employment in the Budget, FISME Secretary General suggested, "Any increase in social welfare and bonus expenses may be allowed as a 300% weighted deduction for the purpose of tax calculations."
Elaborating the needs of the MSMEs on the Non-Tax side, he said there is a need for offsets for MSMEs in all Public funded infrastructure projects above a threshold.
"The impact could be multiplied if suitable offset clause introduced. All centrally funded projects beyond a threshold say of Rs. 500 crore that say 20% of procurement would be done from MSMEs," he said.
On the issue of project financing gap, Bhardwaj acknowledged that the State Financial Corporations played key role in creation of first wave of MSME entrepreneurship through 60s and 70s.
"Now SFCs are defunct," he said adding that there is no replacement of SFCs.
He called for a need to give a fresh look to the SFCs Need to look at SFCs for which a high level committee should set up to look at reviving the SFCs and also exploring possibility of initiating similar institutions in PPP or Private mode.
In his concluding remarks, he was hopeful that the finance ministry would take into consideration the needs of the MSMEs.
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