New Delhi, Mar 5 (KNN)  Continuance of non-tax benefits to the units for three years even after they cross the MSME threshold would come as a relief to the vendors who intend signing up sourcing deals with the global retail giants like Walmart and Tesco.
 
The provision has been introduced in the Union Budget 2013-14.  "To encourage them to grow, I propose that the benefits or preferences enjoyed by them will stay with them for up to three years after they grow out of the category in which they obtained the benefit”, Finance Minister P Chidambaram said in his budget speech.
The threshold for MSMEs in terms of investment in plant and machinery is as follows: Micro – up to Rs 25 lakhs; small – above Rs 25 lakhs and up to Rs 5 crore; medium – above Rs 5 crore and up to 10 crore.
 
While clearing Foreign Direct Investment in multi-brand retail, the government had put a condition that the foreign retailers will have to source 30 per cent of their merchandise from MSMEs.  However, there was a concern that once an MSME would sign up with any of these retailers, its business volume and resultant investment in plant and machinery might go up and it may lose the non-tax benefits.
 
The government opened up the multi-brand retail segment for foreign investors in September 2012 allowing up to 51 per cent foreign funds, but foreign companies are yet take advantage of it fully.
"An investment by Walmart would generate retail and construction jobs, create back-end infrastructure, spur community development, and expand business opportunities for small and marginal farmers and local SMEs," Walmart Asia President and CEO Scott Price said in an interview.
“The change in the overseas investment policy would benefit the Indian economy as it would enable efficient supply chains that reduce food wastage; and the farmers will get better prices and consumers will benefit from lower food prices,” he added.(KNN)