MSME Act needs review
Updated: Jul 26, 2013 04:53:06pm
Ranchi, Jul 26 (KNN) The Jharkhand Small Industries Association has made a representation to the Central and State Governments seeking changes to the MSMED Act which they consider obsolete.
“The industry operates on outdated laws. Labour Laws, Factory Act, Minimum Wages Act, Workmen's Compensation Act, Employees Liability Act and many more need to be completely overhauled to be of benefit to entrepreneurs,” President of Jharkhand Small Industries Association, Arun Kumar Khemka told KNN.
He further stated that although the government had come up with several legislations to safeguard the interests of the MSME sector, there were many issues yet to be addressed.
While admitting that the Micro, Small and Medium Enterprises Act of 2006, was a pioneering act, he said that it was open to interpretations and normally, those with the upper hand described it in a way that suited them.
“The Act needs to be reviewed and corrected where necessary to give full strength to the MSME sector, since the benefit extenders are too large and beyond the reach and voice of MSMEs,” Khemka said.
The association head also pointed to other issues that pose a challenge to the MSME sector.
With regard to land, he said that most of the Land in Jharkhand was non-transferable as it was covered by CNT Act 1908 and S P Kastkari Adhiniyam 1994. While direct purchase of land for the purpose of industry was possible, it was subject to permission from the District Collector, which was cumbersome and not transparent.
Industrial parks and industrial areas are the only easy source of land available for MSME units as they do not require large areas. However, the State Government or Department of Industries is required to take the lead, which incidentally did not materialise in the state.
“The last notified industrial area was created around thirty years ago during the Bihar regime. After the formation of Jharkhand in 2000 no new industrial area has been created. This shortcoming has restricted the growth of MSMEs here,” he said.
As far as sales tax is concerned, Khemka said the department was progressing towards a soft format of the compliance system and he thinks it would take more time.
“Exporting units are not getting refund of excess JVAT lying to credit and hence their cost becomes dearer in the international market,” he said.
However, after lengthy persuasion, applications for refund have been accepted by the department recently; although they are yet to hear positive response.
Khemka is of the opinion that vat rates should be equal throughout the country. Any difference from a neighbouring state is detrimental for fair trade practice and it is bound to harm industrial growth.
Asked about civic amenities, he said staff and workers of MSME Units were facing great difficulties as industrial areas lack accommodation facilities.
“Neither the government nor entrepreneurs have created any housing complex or are allowed to do so within their factory premises in view of the Factory Act. The Government should come up with a low cost housing complex and offer the same to units operating within the industrial area against payment or instalment basis.”
But there have been success stories. The state is home to many MSME units which has been operating successfully for several decades, even without effective support or initiative from the government.
The association has communicated with the Secretary MSME of the Government of India, and also with the Development Commissioner (MSME), raising these issues and they are awaiting some form of response, be it an acknowledgement, observation or regret.
Further, just as the Government of India has a separate MSME Ministry, Khemka is of the opinion that states too should have a separate Ministry or Directorate so that the desired focus is given to the sector.
“The separate governing body while providing a support mechanism and overseeing all subsidies and grants should not be overpowered by non-MSME units,” he said.
The MSMED Act, operational from 2006 was established to provide for facilitating the promotion and development and enhancing the competitiveness of micro, small and medium enterprises. (KNN/ES)
Feedback: newsdesk@knnindia.co.in
“The industry operates on outdated laws. Labour Laws, Factory Act, Minimum Wages Act, Workmen's Compensation Act, Employees Liability Act and many more need to be completely overhauled to be of benefit to entrepreneurs,” President of Jharkhand Small Industries Association, Arun Kumar Khemka told KNN.
He further stated that although the government had come up with several legislations to safeguard the interests of the MSME sector, there were many issues yet to be addressed.
While admitting that the Micro, Small and Medium Enterprises Act of 2006, was a pioneering act, he said that it was open to interpretations and normally, those with the upper hand described it in a way that suited them.
“The Act needs to be reviewed and corrected where necessary to give full strength to the MSME sector, since the benefit extenders are too large and beyond the reach and voice of MSMEs,” Khemka said.
The association head also pointed to other issues that pose a challenge to the MSME sector.
With regard to land, he said that most of the Land in Jharkhand was non-transferable as it was covered by CNT Act 1908 and S P Kastkari Adhiniyam 1994. While direct purchase of land for the purpose of industry was possible, it was subject to permission from the District Collector, which was cumbersome and not transparent.
Industrial parks and industrial areas are the only easy source of land available for MSME units as they do not require large areas. However, the State Government or Department of Industries is required to take the lead, which incidentally did not materialise in the state.
“The last notified industrial area was created around thirty years ago during the Bihar regime. After the formation of Jharkhand in 2000 no new industrial area has been created. This shortcoming has restricted the growth of MSMEs here,” he said.
As far as sales tax is concerned, Khemka said the department was progressing towards a soft format of the compliance system and he thinks it would take more time.
“Exporting units are not getting refund of excess JVAT lying to credit and hence their cost becomes dearer in the international market,” he said.
However, after lengthy persuasion, applications for refund have been accepted by the department recently; although they are yet to hear positive response.
Khemka is of the opinion that vat rates should be equal throughout the country. Any difference from a neighbouring state is detrimental for fair trade practice and it is bound to harm industrial growth.
Asked about civic amenities, he said staff and workers of MSME Units were facing great difficulties as industrial areas lack accommodation facilities.
“Neither the government nor entrepreneurs have created any housing complex or are allowed to do so within their factory premises in view of the Factory Act. The Government should come up with a low cost housing complex and offer the same to units operating within the industrial area against payment or instalment basis.”
But there have been success stories. The state is home to many MSME units which has been operating successfully for several decades, even without effective support or initiative from the government.
The association has communicated with the Secretary MSME of the Government of India, and also with the Development Commissioner (MSME), raising these issues and they are awaiting some form of response, be it an acknowledgement, observation or regret.
Further, just as the Government of India has a separate MSME Ministry, Khemka is of the opinion that states too should have a separate Ministry or Directorate so that the desired focus is given to the sector.
“The separate governing body while providing a support mechanism and overseeing all subsidies and grants should not be overpowered by non-MSME units,” he said.
The MSMED Act, operational from 2006 was established to provide for facilitating the promotion and development and enhancing the competitiveness of micro, small and medium enterprises. (KNN/ES)
Feedback: newsdesk@knnindia.co.in
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