RSS affiliates oppose Modi govt's MSME Amendment Bill, demand withdrawal

Say passage of Bill would turn India into a nation of traders and importers of Chinese goods

Days after a parliamentary panel cautioned that India was staring at becoming a nation of importers of Chinese products, two key Rashtriya Swayamsevak Sangh (RSS) affiliated outfits on Monday expressed similar fears if the Narendra Modi government were to push the passage of the MSME Development (Amendment) Bill in Parliament. They urged the government to withdraw the proposed Bill.

Many of Narendra Modi government’s recently introduced Bills in Parliament have faced protests, including from Sangh Parivar outfits. Opposition parties have repeatedly flagged how the Modi government has bypassed legislative scrutiny by not referring Bills to parliamentary committees and has used its Lok Sabha majority to push through these Bills.

On Monday, the select committee looking into the Financial Resolution and Deposit Insurance (FRDI) Bill, 2017, held a meeting to perform the last rites of the Bill. After protests, the union cabinet had earlier this month decided to withdraw the contentious Bill. The committee will now officially seek Parliament’s permission to withdraw the Bill. The Opposition has also threatened to block the government’s proposed amendments to the Motor Vehicle Act.

Veteran Bharatiya Janata Party (BJP) leader Murli Manohar Joshi and two key Rashtriya Swayamsevak Sangh (RSS) affiliated outfits on Monday asked the Modi government to stop the passage of a Bill that proposes amending the definition of micro, small and medium enterprises, or MSMEs.

Swadeshi Jagran Manch (SJM), an economic think tank, and Laghu Udyog Bharti, which represents interests of MSMEs – both outfits affiliated to the RSS –held a seminar on the subject of the ‘dangers of changing the definition of MSMEs’ on Monday.

Joshi, currently a member of the BJP’s ‘mentors’ group’ chaired the seminar, with SJM’s national convener Ashwani Mahajan and Laghu Udyog Bharati’s national president Jitender Gupta as key speakers. The seminar ended by urging the PM to “immediately halt the Bill”.

The Bill seeks to tweak the definition of MSMEs from the cost of plant and machinery to turnover. In a statement, the outfits said the changed law would allow SMEs enjoy the benefits of MSMEs by shifting from manufacturing to trading and assembling. “Those running industries would be inclined to become traders. This would act against ‘Make in India’ and employment generation,” they said in a statement.

The organisations said anti-MSME policies have forced small industries out of Indian markets, which are now full of Chinese products. “Domestic industrialists are forced and lured to become traders and assemblers and are selling Chinese products,” the organisations said.

They said small entrepreneurs are able to survive by way of whatever little incentives available to them because big industries do not come under the category of MSME. “However, with this change in definition, they will lose all that advantage. Sufferers would be the ‘Make in India’ dream, particularly our youth,” they said.

Subsequent to the union cabinet approving the amendments at its meeting on February 9, the Modi government introduced the MSME Development (Amendment) Bill in the Lok Sabha on July 23. It seeks to amend the MSME Development Act of 2006.

Currently, micro units are defined as those which employ plant and machinery of up to Rs 2.5 million. The limit for small-scale enterprises is Rs 50 million, and for medium industries Rs 100 million.

According to the proposed amendment, the definition of micro units would be defined as those units with an annual turnover of Rs 50 million. For small-scale enterprises, this limit would be Rs 750 million of annual turnover and it would be Rs 2.5 billion for medium units.

“There is no reason or legitimacy for this change in the definition of MSMEs,” Mahajan said. The SJM and Laghu Udyog Bharti said the concept of clubbing of MSMEs in one category would be detrimental as nature and problems of each type of units are different. They said for promoting manufacturing in the country there was a need to keep manufacturing enterprises separate from non-manufacturing enterprises.

The RSS affiliates termed it “unfortunate” that the government is pushing the Bill for passage, but blamed the “misguidance” by the bureaucracy. It reminded the Modi government how under Atal Bihari Vajpayee-led government the limit of investment in plant and machinery was revised from Rs 30 million to Rs 10 million. They said this benefitted small industries “enormously”. It said that according to the NSSO data, the workforce in self-employed increased from 54 percent to 57 percent.

The RSS affiliates said the one-man former cabinet secretary Prabhat Kumar committee too had recommended to keep the definition of MSME on the basis of cost of plant and machinery. It said the committee had rejected bureaucracy’s recommendation to change the definition to the turnover basis.

The Sangh Parivar outfits claimed how nowhere in the world MSMEs are defined purely on turnover. They said 98 percent of small units have a turnover of less than Rs 150 million. “That means with this change in definition hardly 2 percent would attain the status of MSMEs at the cost of 98 percent,” they said.

The two outfits also said the change in definition would incentivise small industries entrepreneurs to shun their industries and become importers or traders.