Industry demands 6% bank credit to MSME

MSME chamber Indian Industries Association (IIA) has demanded 6 per cent of net bank credit to the micro enterprises in the country.

IIA said low-level of financing to the sector was owing to the reluctance of banks to finance small loans and poor growth of the manufacturing sector.

Association President Anil Gupta, who is a member of the high-level MSME task force constituted by the Prime Minister, raised these points at the first meeting of the body in New Delhi on September 25. The meeting was chaired by T K A Nair, PM’s principal secretary.

Gupta further said interest rates on MSME loans should be on a par with the agriculture sector.

The present limit of 49 per cent FDI participation in SME should be enhanced to 75 per cent and loans should be extended to MSMEs against property as are made available to traders.

On the issue of delayed payment to MSMEs, he said the ministry may ask for regular information from the Facilitation Councils on the number of cases received and disposed off with corresponding dates.

Besides, Sidbi could help rehabilitation of sick MSMEs by providing 10 per cent equity for long term and at lower rate of interest with a special fund earmarked for this purpose.

There was also a need for simple set of Labour Law and Act for MSMEs to run their business.

MSME contribution in manufacturing sector in the country was more than 45 per cent, hence, provision should be made to reserve at least 40-50 per cent of the quantity of purchase by any department from MSME at competitive price and quality and the Centre may ensure that “discriminatory practices” against MSME, such as putting maximum turnover conditions in tenders, were waived immediately.

Gupta recommended vigorous awareness campaigns about Goods & Services Tax (GST) and single rate of GST for all commodities/items all over the country.

He said all MSMEs be exempted from paying service tax, thus, saving from needlessly filing half yearly returns.