India's Medium, small and micro industry also known as MSME sector creates the back bone of industry. Today more than 36 million units registered under MSMEs provide employment to 120 million people across the country. Despite ups and downs of industry, this sector grew at a steady rate. However, in past one year, entrepreneurs have faced problems owing to Demonetisation and GST.
The first thing these entrepreneurs want is easy credit and reduction in the corporate tax, a promise made in last general budget. Kapil Chopra, MD of SKN-Bentex group based in Narayana industrial area in Delhi, says, "Even today the corporate tax is 30 %. If you add cess and surcharge it becomes 35%. It should not be more than 25% going by international standards."
Experts believe though government had promised to reduce the corporate tax in an staggered manner but finance minister will initiate in this direction only when GST tax collection grow to a substantial level.
Though govt introduced GST as a major economic reform last year, still the tax regime is not seamless specially the VAT still exists on many products. Shimla based business Kuldeep Singh Bagga says it puts financial burden on the manufacturer. "If you have to introduce GST you do it fully and remove the VAT. I give you an example I purchase alcohol for my cosmetic industry but it isn't under GST. We have to pay VAT on that and we don't get input credit. So out cost goes up." Says Mr Bagga.
This sector contributes to almost one third of entire manufacturing output and make almost 45% of India's export. Surendra Bansal, an entrepreneur in printing industry feels that in order to speed up the growth of MSMEs, the licencing ought to be made easy. "If we want to import machine for printing, the import duty should be less. Because some machines are manufactured by just one manufacturer in the country and this leads to monopoly. Licencing should be easy," he said.
PM Modi invited global investors in Davos and assured that there is no red tape in India but only red carpet. However entrepreneurs running small and medium scale industry say they face red tape every day and there is no ease of business for them. They demand single window clearance.
"If somebody has to start a new business he faces several hurdles... For every single thing he has to go to several departments for get clearance. Five or six years of his life go waste in this process only." Says Mr Chopra
Will finance minister help them come out of the crisis? Only budget and its implementation will tell.
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