Chennai, NFAPost: Consortium of Indian Associations (CIA) report states that 80% SMBs across India insecure about the future following Covid 1 And 2 Lockdowns.
CIA and its 40 partner SMB associations released the findings of a Mega Survey that covered the plight of over 81000 Self-employed and Micro/ Small Businesses (SMBs) from across India.
The respondents included manufacturers (49%), service providers (15%), self-employed (14%), and consultants, start-ups, traders, food and hospitality and others.
The 63 million micro, small enterprises (MSEs) and 40 million self-employed individuals in the country form the backbone of India’s economy, The Covid-1 & 2 induced lockdowns over the last fifteen months have severely crippled this sector, as revealed in the findings of the report. Some key highlights include:
• 73% of SMBs have not made any profit during the last FY
• 42% unable to decide on retention of employees.
• 59% reduced/sacked/removed their staff compared to the pre-COVID period (the first wave: 37%; second wave: 22%)
• 88% of respondents yet to avail any of the stimulus packages introduced by the Government of India.
• 82% felt that the central and state governments weren’t looking after their interests.
On the occasion of the release, Convenor of CIA and former national president of All India Manufacturers’ Organisation K.E. Raghunathan says over the past year, CIA has provided vital suggestions and modifications required on several initiatives taken by the Central and State Governments for the benefit of MSMEs.
“As a result, we realised that a data-backed survey would help consolidate the feedback from this sector, to bring out the pain points and provide solutions and a way forward to revive the sector,” said K.E. Raghunathan.
The report espouses that the government needs to adopt a three-pronged approach towards SMBsExempt, Protect and Support, to mitigate the challenges currently being faced by the sector 1) exempt from statutory compliances, penal actions and litigation 2) protect them from the high interest burden, price wars, high cost of raw materials, losing employees, penalties, and late fees 3) support by giving liberal loans, clearing off the pending dues, offering moratorium with interest waiver, and not declaring NPAs for a year.
Though the Government talks about the ease of doing business, SMBs continue to be governed by complicated and outdated laws and dispensable compliances. The report recommends that the government should, in turn, revisit/scrap/redraft these laws. A suggestion for a separate SMB MINISTRY, for the Self-Employed and Micro/Small businesses has been made, so that issues specific to this sector can be looked into and attended to properly.
CIA also proposes that the Government amend the Micro, Small and Medium Enterprises Development Act, 2006, to strengthen the state facilitation councils. Ravi Sood, General Secretary of Badli Industrial Estate Association adds Micro Small Enterprises Facilitation Centers should be given more power to conduct their proceedings in a transparent and time-bound manner, and enforce payment of the specified interest to the aggrieved MSMEs. “The government also needs to make changes in the GST Act to make it SMB friendly,” said Ravi Sood.
The report also touched upon the point that the laws relating to land use by industries, especially MSMEs, need a relook as these are not conducive to their growth. It states that MSMEs should be allowed to hold titles of their industrial properties on a free-hold basis so that they can use them for securing loans and other facilities.
Entrepreneurs who sell off their residential properties to set up MSMEs should be given exemption under the IT Act. The requirement to secure a separate factory license to setup a factory on a government-approved industrial estate should be done away with because it leads to red-tapism.
CIA also highlighted a series of long term and short-term measures to the Central and State Governments to beat the impact of the lockdown on the SMBs, which includes on GST vows, pending payment collections, extensions, and relaxations, NPA classifications, refinancing options, opening fair price shops for raw material supplies, ban on exports of steel and cement for six months, fixation of Remission of Duties and Taxes on Export Products urgently and refund to exporters dues since January 2021, exemption of GST rate of 18% for vehicle insurance and medical insurance till March 2022 , increase in ECGLS allocation and relaxation in the norms of eligibility of restructuring and exemption from EB fixed charges , Property taxes , MoDT charges from State Governments till March 2022..
CIA has also proposed to start collecting data of Self-Employed, MSME businesses in the country from banks. Based on this data, the business type could be correctly classified as traders, professionals, service providers, exporters, engineering enterprises, etc, as well as on employees in them both migrant and formal. Currently, enterprises pay more to the Government than the profit they make.
“The revenue-sharing pattern between the enterprises and government should be refixed based on the turnover and profits to enable entrepreneurs to benefit and stay within the legal framework,” says Raghunathan.
EPFO/ESI should be amended to include exemption of up to Rs 5 crore turnover enterprises, apart from number of employees and salary limits. The Consortium aims to submit the data-backed report and findings to Hon’ble Prime Minister Narendra Modi, Union Minister of Finance Nirmala Sitharaman, Union Minister of MSME Nitin Gadkari, Union Minister of Commerce and Industry Piyush Goyal, and to all state chief ministers.