KASSIA Submits Pre-Budget Memorandum Seeking Major MSME Reforms

Bengaluru, Feb 17 (KNN) The Karnataka Small Scale Industries Association (KASSIA) has submitted its Pre-Budget Memorandum for 2026–27 to Karnataka Chief Minister Siddaramaiah, outlining a series of proposals aimed at strengthening the state’s MSME ecosystem.

Funding Support for Centre of Excellence

KASSIA has sought a special grant of Rs 7 crore to complete the Centre of Excellence (CoE) and Innovation at Dabaspet. The project, which earlier received Rs 5 crore during Siddaramaiah’s previous tenure, faced delays due to the pandemic and rising costs.

Of the revised Rs 34 crore project cost, around Rs 20 crore has already been spent. The association said additional funds are required to complete essential infrastructure and utilities.

Infrastructure Upgradation in Industrial Areas

The association highlighted that nearly 94 per cent of industries in Karnataka operate in private industrial estates that lack basic amenities such as roads, drainage and street lighting. It urged the government to formally recognise these as private industrial areas and provide infrastructure support.

KASSIA proposed that property tax collected from industries by local bodies, including Bruhat Bengaluru Mahanagara Palike, should be separately accounted for, with at least 50 per cent reinvested in the same industrial areas.

It also sought rationalisation of solid waste management user charges introduced from 2025–26, stating that the current rates are disproportionately high for micro and small industries.

Further, a one-time allocation of Rs 500 crore has been requested to upgrade infrastructure in estates managed by the Karnataka Industrial Areas Development Board (KIADB), Karnataka State Small Industries Development Corporation (KSSIDC) and private industrial areas.

Land, Power and Financial Relief Measures

KASSIA has proposed empowering KSSIDC with land acquisition provisions to develop smaller plots and plug-and-play sheds tailored for MSMEs.

The association also called for withdrawal of the recent increase in electricity tax from 5 per cent to 9 per cent, stating that MSMEs are unable to claim input tax credit and are facing additional financial pressure.

It further sought reduction in stamp duty on hypothecation and mortgage for bank loans from 0.5 per cent to 0.1 per cent, with a cap of Rs 50,000 for MSMEs instead of the current Rs 10 lakh ceiling.

Exemption from professional tax for entrepreneurs and workers in micro and small industries has also been proposed.

Policy and Regulatory Suggestions

KASSIA recommended reopening the Karasamadhaan Scheme for settlement of pre-GST dues until December 2026 to enable wider participation by MSMEs.

Under the KSFC 5.5 per cent interest subvention scheme, it sought extension of the subsidy period for general category entrepreneurs from five to eight years, aligning it with benefits available to SC/ST entrepreneurs.

The memorandum also requested a one-time exemption for micro and small enterprises to obtain new power connections without mandatory completion and occupancy certificates.

Additionally, KASSIA proposed the establishment of a Water Regulatory Authority, on the lines of the Karnataka Electricity Regulatory Commission, to regulate tariffs and address water supply grievances involving agencies such as the Bangalore Water Supply and Sewerage Board.

Support for Trade Promotion and Industrial Clusters

The association sought dedicated funding for the Visvesvaraya Trade Promotion Centre under Market Development Assistance to support trade delegations and exhibitions for MSMEs and women entrepreneurs.

It also urged restoration of the land rate at the FMCG Cluster in Mummigatti Industrial Area, Dharwad, developed by KIADB, to Rs 98 lakh per acre from the revised Rs 1.38 crore per acre, citing concerns over investor sentiment and existing MoUs.

(KNN Bureau)