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Budget Special: Tamil Nadu MSMEs urge FM to lower interest rate, raise working capital and come out with an Exit Policy

Updated: Jan 11, 2017 07:42:55am

Budget Special: Tamil Nadu MSMEs urge FM to lower interest rate, raise working capital and come out with an Exit Policy

Chennai, Jan 11 (KNN) With the Union Budget to be announced in less than a month’s time now, Tamil Nadu MSMEs have urged the Union Finance Minister Arun Jaitley to consider raising working capital limit for the micro, small and medium enterprises sector, lowering of interest rates, more industrial areas for the units and an Exit Policy.

The sector, which has incurred huge loss due to cash crunch post demonetization, has pinned hopes on the government to give incentives to them to make up for the losses.

KNN spoke to various associations in Tamil Nadu to know what their expectations from the Union Budget are.

The Vice President (VP) of Tamil Nadu Small and Tiny Industries Association (TANSTIA) K.R. Gnanasambandan said though MSMEs have valuable contribution in the country’s GDP, yet the sector is being ignored by the Government.

He said, “It is often acknowledged that MSMEs are the backbone of an economy but no strong steps have been taken by the government to help the sector.”

He said only five percent of the MSME units that are located in the industrial estates. Looking at the number if MSMEs, there should be at least 20 to 50 industrial estates in each state so that the industries don’t migrate to other states, said Gnanasambandan.

Tanstia also urged the MSME Ministry to give some flexibility in the schemes for small sector.

“MSME Ministry should come up with flexibility in its schemes,” ATNSTIA VP said.

He said generally after filing any application it takes more than 3-4 years to get the subsidies.

“After four years whatever subsidy we get, is spend over the affiliation cost,” claimed Gnanasambandan.

Further, he said that the government should provide land, similar to what is done in China and time period of loan repayment should be increased to 10 years from existing 5 years.

“We keep on comparing ourselves with China where the land is provided on lease, but here we are forced to buy our own building which is not possible for every industry. If housing loans are provided for 15 years then duration of loan repayment for industries should be of 10 years,” added Gnanasambandan.

The President of Association of Micro, Medium and Small Scale Entrepreneurs (AMMASE) said that the association has already sent a pre-budget memorandum to the government emphasizing increase in working capital limit from 20% to 50%.

He said the interest rates should be brought down in order to curb companies from turning into Non-Performing Assets.

He said there should be an exit policy especially for the small sector with a view to continue the business.

“The only exit policy is available for the small scale is to close the unit and get out. So there must be mechanism where there will be exit of an entrepreneur not the enterprise,” said V Jayakumar.

He said, “There can be business exchange model in which an entrepreneur can registered in the exchange and continue the business for some time. And those who are interested in taking over the business can take over, so it will be a win-win situation for both,” said President of AMMASE. (KNN/RAS)


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