UP MSME wants level playing field

As the Union Budget 2010 date draws near, the Micro, Small and Medium Enterprises (MSME) in Uttar Pradesh are ready with their wish-list for a major push to the sector, which contributes over 50 per cent of the state’s industrial output.

UP has a large MSME base, estimated at almost 1.2 million, including half million registered units. There are MSME pockets in the state like Varanasi, Allahabad, Moradabad, Saharanpur, Lucknow, Kanpur, Agra, Ferozabad, Meerut, Bhadohi, Ghaziabad, Noida, Bareilly, Gorakhpur, Khurja, Aligarh and Mathura.

MSME chamber Indian Industries Association (IIA) president Anil Gupta told Business Standard the sector was against any tax holidays per se, but wanted the government to create a level playing field for MSMEs.

“MSMEs have different set of problems compared to large caps. Our input cost is high as we buy in smaller quantities, but our products are sold cheaper due to cut throat competition in the sector. Big players can form a cartel, however we do not have means to do that,” he lamented.

“So far as UP is concerned, the incentives being provided to the industry in Uttarakhand is proving detrimental to our industry operating in the areas adjacent to the hill state, which is creating a disparity,” he lamented.

“The Centre should provide incentives only to the units being set up in the hilly areas of Uttarakhand and not the plains adjoining UP,” he added.

“We welcome Goods and Service Tax (GST), but there’s still an air of uncertainty over its implementation, which should be cleared,” Gupta noted. He also censured the proposed differential GST rates for the Centre and the respective states.

“The differential rates would defeat the very purpose of the need for a uniform tax system in the country to usher in parity,” he maintained.

IIA is also member of the high level MSME Task Force constituted by Prime Minister Manmohan Singh.

“We also demand that MSMEs get interest subvention at par with agriculture. At present, we get advances at about 12.5 per cent, which is high for us,” he added saying the Centre should provide credit at 8-9 per cent.

The total credit to MSMEs by commercial banks in UP is likely to breach the figure of Rs 25,000 crore this financial year. The actual credit would be much higher as advances by Regional Rural Banks (RRBs) are not included in the figure of Rs 25,000 crore. “A lot of industrial activity takes place during the first 3 months of every calendar and it is certain that the MSME advances will be above Rs 25,000 crore this fiscal,” Punjab National Bank (PNB) GM Rohtash Kumar said.