Budget 2019: Earmark Rs 50 cr fund for each district to help SMEs, make minimum wage flexible for SMEs: KASSIA to Kumaraswamy

Bengaluru, Jan 30 (KNN) Karnataka Small Scale Industries Association (KASSIA) has written to Karnataka Chief Minister HD Kumaraswamy requesting his government to specially earmark funds of Rs 50 crores for each district in the Budget to help the micro, small and medium enterprises (MSMEs.

In its Pre-Budget Memorandum submitted to the state government, KASSIA said the fund will be for the development of private industrial areas in addition to the Karnataka State Small Industries Development Corporation (KSSIDC) Industrial Estates to further help MSMEs.

The funding may be rooted through the Department of MSME as the nodal department for overseeing the distribution of funds to districts for such infrastructure development, the industry association suggested.

This will be of great help to SMEs as most of them function from private industrial estates, KASSIA President Basavaraj S Javali said .

In their pre-budget memorandum, KASSIA requested Karnataka Chief Minister to suitably amend the land Reforms Act to enable KSSIDC to acquire land for the benefit of SMEs.

KSSIDC must also restart supply of raw materials to the MSMEs at cost effective rates, it added.

KASSIA thanked the government for extending finance at 4% interest by subsidizing the interest through the Karnataka State Financial Corporation (KSFC), but also said, “We find that the repayment period of 5 years is too short as the project pay back invariably takes longer time. We therefore, request the government to extend the repayment period to 10 years from the final disbursal of the loan.”

The industry body requested the government to spread the EMI payment from the completion of the project by giving sufficient lead time as against the present practice of starting repayment early.

“We request the government to extend the interest subvention scheme to SIDBI which currently lends to SMEs at 8.1%.   By doing this, the government will have saved 6% subsidy on interest a part of which can be retained by the government and part further shared with the entrepreneur in support of enterprise in the SME area,” KASSIA said.

KASSIA pitched in for lowering of power tariff for SMEs citing that the costs from Solar and other sources have considerably reduced. 

“We therefore request the government to reduce the power tariffs to the SMEs so that SMEs are able to operate successfully in the interest of the State and the entrepreneurs,” KASSIA pointed.

KASSIA called for a special financial provision of Rs 500 crores to be made to improve infrastructure in the private industrial estate in the State.

Taking a look on women entrepreneurs, KASSIA said in the memorandum that if women entrepreneurs are considered as minority entrepreneurs and all the benefits extended to minority entrepreneurs are also extended to women entrepreneurs, it would not only encourage them but will also improve the economy of the country by bringing  on to the main stream this important segment. 

Such a policy will also encourage women to participate in greater numbers in business, it added.

Also, concessions offered to women entrepreneurs must be on par with benefits offered to SC/ST entrepreneurs as per the prevailing industrial policy.

KASSIA proposed providing flexibility in fixing minimum wages so that SMEs which provide employment to the unskilled and illiterate are able to derive benefits from those employees in-spite of inadequate training and low productivity.

Formulating separate minimum wage structure for SMEs is also suggested.

SMEs must be subsidized by up to 25% of the minimum wages in the first year on such employees, perhaps placing a cap on the number of employees, KASSIA said.