Among the various measures announced by the government last week to revive the economy, the decision to clear pending GST refunds to MSME units within 30 days is enthusing small industry the most. Here Manguirish Pai Raiker, chairman, National Council for MSME, ASSOCHAM, writes on the working capital woes of the MSME sector. He says to Team B&C, that, the measure will go long way in reviving small industry both in manufacturing and service.
Finance Minister Nirmala Sitharaman in her announcement yesterday promised to release the refunds from GST to MSME within 30 days. This has brought huge relief to the sector which is facing market problems for non recovery of the payments. The facilitation council does try to help but has limitations. This council needs to be given teeth by introducing strong punitive actions in the act. Most of the times it is the government and semi government agencies which fail to honour the payments.
The finance ministry is aware that MSME plays a key role in generating employment and boosting exports. The government is now taking steps to help and promote this sector by taking steps to undo the wrong that has created problems for the sector in the post demonetization period.
Fiscal incentives like interest rate subvention, lower tax rates for up to certain turnover threshold for key MSME industries that help in achieving the twin objectives of exports and employment generation along with schemes like PSB loans in 59 minutes and Credit Guarantee Fund Trust For Micro And Small Enterprises (CGTMSE) have been introduced. Yet despite these initiatives things are not looking rosy as market conditions are dull and does not seem to be taking off.
Proactive approach from the banks is not forthcoming. It is expected that there would be adequate fund flow from the non banking finance companies (NBFC’s.) Another good measure is regarding the transparency in MSME retail loans and factoring services to be introduced will definitely benefit and bring smile on the face of the entrepreneur. An important decision with respect to GST was taken such as in future all GST refunds shall be paid within 60 days from the date of application and all pending GST refund due to MSMEs will be paid within 30 days.
The centre also announced that the ‘angel tax’ provision will be withdrawn for startups and their investors to lower its burden of compliance and boost sustainability. This announcement was to highlight the significant role of Indian startups in raising the country’s profile. “India has become the second largest startup movement in the world. Last year we added about 1,200 startups according to data shared by the Ravi Shankar Prasad, Minister of Electronics, Information and Technology and
More measures to benefit the sector are expected to come in soon as the finance and MSME ministry is working overtime to revive and rehabilitate this sector. On behalf of the MSME industry we request for strict implementation of government purchases through MSME along with prompt payment.