Hailing govt’s pkg for industry, ELCINA says new definition concern for MSMEs

New Delhi, May 15 (KNN) The electronic industry of India has hailed Prime Minister Narendra Modi’s “visionary statement” with focus on self-reliance stating it augurs well for industry and stronger domestic value chains.

The Electronic Industries Association of India (ELCINA) opines this will mean balanced interdependence with other countries and reduced dependence on imports. 

“An economic package of Rs 20 Lakh Crores, about USD 270 Billion, is indeed formidable and can change the fortunes and direction our country is moving in. However we need to ensure careful and meticulous planning and delivery of this package to overcome our challenges,” ELCINA said in a statement.  

ELCINA particularly appreciated the focus on MSMEs and also the allocation of Rs 3 Lakh Crores for collateral free 20% enhanced credit as a top up to outstanding loan as on 29.02.2020 is laudable.

“We do hope that these will cover MSME’s under the new definition of Investment upto Rs 20 Cr. Moratorium of 4 Years on this loan is also appropriate,” ELCINA President  Amrit Manwani said adding that “Industry welcomes and appreciates this step and urged that guidelines should be issued immediately to Banks to disburse these loans as the need for funds is now and any delay would defeat the purpose of this initiative”.

Other announcements too are welcomed by ELCINA including provision of enhanced liquidity for MSMEs by infusion of Rs 20,000 Cr as Subordinate Debt for stressed MSMEs and creation of a Fund of Funds with a corpus of Rs 50,000cr to infuse equity and enhance the capacity of MSME’s to expand and garner more funding. We urge the government to put these in action urgently.  

Direct Tax benefits relating to reduced TDS and immediate refund of taxes which are due, though not part of the economic package, will certainly improve the much needed liquidity.

Restricting Government procurement tenders upto Rs 200 Cr from being floated globally and restricting to domestic companies is the right move for market expansion. The only caution here is that all such tenders from Central as well as State Governments, PSU’s and government funded projects should be brought under the purview of this rule. This will then bring real benefits for MSME’s and domestic companies, said ELCINA.

Payment of EPF by Government was a most welcome step and so is its extension. However the limit of 100 employees must be enhanced as MSME’s with turnover of upto 100 Cr employ atleast 300-400 employees. We recommend that the limit of employees in units benefiting from this clause in raised to 400 and minimum monthly wages of workers covered is raised to Rs 25,000 so that semi-skilled and skilled workforce are not excluded.

An area of serious concern and disappointment for MSMEs, especially those from Electronics Manufacturing sector is the revised definition for which industry was waiting since last few years.

“The draft under consideration proposed a sales turnover based definition with Rs 250 Cr, Rs 75 Cr and Rs 5 Cr for Medium, Small and Micro enterprises respectively. This would be the right framework in today’s scenario,” pointed the industry body.

In order to differentiate between trading and manufacturing, and to include investment in this definition, ELCINA proposed the following limits: