Budget banks on trickle-down effect to spur MSME growth: KASSIA

Bangalore, Mar 1 (KNN) The Finance Minister has pinned his hopes on his Budget's trickle-down effect to spur the growth of the MSME sector, said industry body KASSIA in its response, suggesting that it did not initiate any measures that would have direct impact on the small scale industry in the short-term.

“The food processing sector will get a huge fillip from the proposal to permit 100% FDI through the Foreign Investment Promotion Board route for marketing of food products produced and processed in India,” acknowledged V.K. Dikshit, President, Karnataka Small Scale Industries Association (KASSIA).

“The proposal to amend the Companies Act for enabling registration of firms in a day will help to improve the ease of doing business.”

“The corporate tax fixed at 25% for new manufacturing units fixed is a welcome step,” Kassia said.

The Employee’s contribution to EPF to be paid by the government for the first 3 years for all new employees enrolling in EPFO will help in worker retention in small industrial units.

The industry body further stated that the decision to promote entrepreneurship by increasing the turnover limit under presumptive taxation scheme from Rs 1 cr to Rs 2 cr is well intentioned, but inadequate, because a majority of even micro enterprises have turnover of more than Rs 2 cr and so will not get the benefit.

However the targeted increase in credit under PM Mudra Yojana to Rs 2,18,000 crore and 100% deduction of profits for 3 years out of 5 years for startups is commendable, added Kassia.

The budget has also rightly attempted to address a core demand of the MSME sector in introducing transparency in public procurement by DG&SD. However this should not be limited to e-procurements only but extended to removal of the ubiquitous L1 system also which is the main reason for corruption in public procurement and poor product quality, said Kassia.

Other measures that merit mention are the extension of the duty drawback scheme to include more products and countries, Rs 500-cre allocation for SC & ST entrepreneurs under Stand-up India, entrepreneurship education and training to be provided in schools and colleges, and deduction towards tax for rent paid raised from Rs. 20,000 to Rs. 60,000 to benefit micro entrepreneurs living in rented houses. (KNN Bureau)