Union Budget 2015: ASSOCHAM demands inclusive economic growth and comprehensive jobs creation

New Delhi: The MSME sector employs nearly 10 crore people and accounts for over 95 per cent of the total number of industrial enterprises. It contributes about 45 per cent of the manufacturing output and 37.5 per cent of the GDP while accounting for 40 per cent of the total exports from India. Institutional financing gap for MSMEs is projected to be $ 418 billion which provides new opportunities to financial services institutions. MSMEs also have potential for employment generation particularly for the bottom of the pyramid social strata.

ASSOCHAM on Wednesday recommended the following for the Union Budget 2015 to provide a fillip to the MSME sector.

Short Term Measures:

Priorities for Union Budget 2015-16

1. Broaden the definition of MSE by doubling the present threshold investment in Plant & Machinery with 10% annual escalation clause.

2. Interest subvention for exports, tax breaks for investment or lease/rental of premises and capital goods.

3. Capital Gains Tax exemption for One Time Settlement with banks and enable payment of Service Tax on realization of receivables.

4. Overall procurement of 20% from MSME to be mandatory w.e.f. 1st April, 2015 under Public Procurement Policy.

5. Certification of payments due towards MSMEs, by auditors of large firms to address receivable related burden of MSME vendors-suppliers.

Improved access to capital:

1. Include finance to medium enterprises by all banks as Priority Sector Lending.

2. Classify loans to Food & Agro processing units as 'Direct Agri' to reduce cost of credit.

3. Improve global competitiveness of MSMEs by linking refinance rate with LIBOR based international rate.

Long Term Measures:

Growth enablers

1. Simplified norms and incentives to invest in cutting edge technology ventures for alternate sources of capital like Private Equity, Venture Capital, Angel Funding and focused Investment Fund for MSME.

2. Set up a mechanism for small firms to convert their trade receivables into liquid funds and improve their finances.

3. Improve shared resource pool for tooling, testing, marketing to help small firms reduce business overheads.

4. Implement MSME specific guidelines for restructuring or closure of distressed units to improve ease of doing business.

5. Reform the archaic labor laws linked with various acts like The Factories Act, 1948, The Industrial Disputes Act, 1947 into a single labor code.

External linkages:

1. Initiate tie-ups with overseas MSME clusters & industrial establishments and increase MSME presence in industrial fairs to improve exports potential.

2. Large corporates to anchor Industry-Academia collaboration through PPP to promote cost effective technology upgradation & incubate small units with Intellectual Property potential in facilities akin to STPI.

3. Promote partnership among industry associations and trade bodies to roll out skill development programs for small businesses.