If Bill to re-define MSMEs is passed, MSMEs will lose their distinct identity: SJM to KNN India
New Delhi, Sep 24 (KNN) The bill to re-define Micro, Small and Medium Enterprises (MSMEs) on turnover basis has been reportedly opposed by various political parties as well as some trade bodies related with MSMEs including Rashtriya Swyamsevak Sangh (RSS) and Swadeshi Jagran Manch (SJM).
Speaking to KNN India, Co-convenor of SJM, Ashwini Mahajan said if this bill is enacted, MSMEs will lose their distinct identity as the turnover amount is very high.
“No-where in the world, turnover is sole criteria to define MSMEs,” he added.
He said that it is ironical that the country like India where small scale provides a lot of employment is being discouraged.
Schemes like Make in India or inclusive growth, self- employment and more are also not encouraged through this bill, he said.
The Bill was introduced in the Lok Sabha during the monsoon session. Only two more sessions remain for the current House, its life is till the term of the 15th Lok Sabha.
If the government does not get the Bill passed during the next two sessions, it will automatically lapse.
The MSME Development (Amendment) Bill, 2018, prescribes any business with a turnover of up to 5 crore will be considered a ‘micro enterprise’. The other slabs are 5-75 crore for ‘small enterprise’ and 75-250 crore for ‘medium enterprise.’
At present, there are two sets of definitions, depending on whether the units produce goods or services. Under the goods category, the slabs are up to 25 lakh for micro, 25 lakh to 5 crore for small and 5-10 crore for medium. In the case of services, the slabs are: up to 10 lakh, 10 lakh to 2 crore and 2-5 crore.
The Bill’s statement of objects and reasons said, “It has been felt necessary to change the criteria for the classification in order to align it with the needs of the current times and changing business ecosystem.”
The statement also said the criterion of investment entails physical verification, bringing with it transaction costs. It also incentivizes promoters to keep the investment size small to retain the MSME tag.
“Overall, the turnover based classification will promote the ease of doing business and will put in place a non-discretionary, transparent and objective classification system,” the statement read. (KNN/ JM)