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Budget measures to help MSMEs sans investment allowance

Updated: Mar 07, 2013 08:57:09pm
New Delhi, Mar 5 (KNN) TheUnion Budget has provided a number of schemes to boostMicro Small and Medium Enterprises (MSME) but has deprived them of the investment allowance which will be mainly restricted to large companies.
“MSMEs are disappointed as theproposed investment allowance of 15 per cent to a manufacturing company that invests in plant and machinery during the period April 1, 2013 to March 31, 2015 is restricted to large companies,” said Federation of Indian Micro and Small & Medium enterprises (FISME)Secretary General,Anil Bhardwaj. 
As the investment allowance will be available to those investing Rs 100 crore or more, the MSME sector will be kept of the scheme. “Why were MSMEs excluded whenthe Finance Minister was so eloquent about their contribution to job creation and industrial production?”Bhardwaj asked.
However, on the positive side, the MSMEs would continue to avail non-tax benefits (NTBs) for three more years after crossing the threshold.  The NTBs to be available to units even after they cross the MSME threshold include Market Development Assistance (MDA), access to 20 per cent public procurement set-aside in Central Government purchases, funds for Design, IPR, Quality, Credit Guarantee and other such support. 
As per the budget provisions, the re-finance of Small Industries Development Bank of India (SIDBI)schemes, will be doubled from Rs 5000 crore to Rs 10,000 annually. SIDBI had established the India Micro Finance Equity Fund in 2011-12 with budgetary support of Rs 100 crore to provide equity and quasi equity to Micro Finance Institutions (MFIs).  An amount of Rs 104 crore has been proposed for 37 MFIs.
In addition, Technology Up-gradation Fund Scheme (TUFS) would be extended to thetextile industry.   With an aim to modernise the power-loom sector, TUFS for textiles will continue in the 12th Plan with an investment target of Rs 151,000 crore.  The budget has stipulated Rs 2400 croretowards this end. 
Significantly, MSMEs and start-ups would be permitted to list themselves on the SME exchange without an Initial Public Offering (IPO). Commenting on the proposal, Secretary General, FISME said, “Allowing the MSME to tap capital market is supposedly a step to remove an impediment to strengthen the SME exchange. However, this hardly addresses the root cause of failure of the SME exchanges so far (during the last one year the number of listings has not reached a double digit mark) which is, lack of investor interest in MSMEs and shying away of Merchant Bankers from underwriting the issues.
“The way ahead for the concept to succeed is creation of a large fund to support merchant bankers for market making and asking financial institutions to invest in SME sector,” he added.  KNN


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