Defining MSMEs on the basis turnover will lead to cluttering of SMEs for benefits: KASSIA
Bengaluru, Aug 6 (KNN) The Karnataka Small Scale Industries Association (KASSIA) has requested the government to classify MSMEs on the basis of turnover and number of employees stating that the proposed definition will bring in large number of firms within the definition of SME.
KASSIA sought Government’s attention towards the proposed change in the definition of MSME to be brought about by the Government with amendments to the MSME Act.
The new definition on the basis of which MSMEs will be classified are – Industries with Upto Rs. 5.00 Crores will come under Micro, Industries with turnover from Rs. 5.00 Crores to Rs. 75.00 Crores will come under Small and Industries with turnover from Rs. 75.00 Crores to Rs. 250.00 Crores will come under Medium.
KASSIA President Basavaraj S Javali said, “We feel this is quite a drastic change and may jeopardise the very existence of large number of small manufacturing units.”
The industry body expressed concern that the proposed definition will bring in large number of firms within the definition of SME.
“This is a serious worry as such a thing will likely crowd out a large number of small units from the benefits targeted at them as there will be much higher demand for such benefits from a greater number of businesses. This will definitely harm the interest of SME which are largely family run and struggle for existence, and depend a great deal on such incentives and concessions for survival.”
The distinction between manufacturing and service has been removed in the new definition. This will further add to the numbers and negatively impact on the manufacturing and thereby creation of jobs and enterprise development, Javai said.
KASSIA said SMEs are eligible for mandatory share in the public procurement of 20%, though this remains contentious.
This will likely be negatively impacted with the many hitherto medium and large industries coming in to the bracket and with the small cake available having to be further shared with a large number of so called SMEs. This is an undesirable consequence, Javali said.
KASSIA has suggest that the Government maintain the “status-quo in the definition of MSMEs” by continuing the definition of MSMEs on the basis of investment, as being presently followed.
Government may, however, increase the investment limits suitably taking into account inflation and the other parameters, it added. (KNN Bureau)