A big reforms push for small biz: PMO, ministries readying major MSME plan

PMO, finance, and MSME ministries working on cluster-to-national reform roadmap with focus on jobs, cost control, legal ease, and innovation in small business sector

A fresh round of reforms could  be rolled out soon for the micro, small, and medium enterprises (MSMEs) sector.

 

The Prime Minister’s Office (PMO) is working with the MSME ministry and finance ministry on steps to reduce the tax and compliance burden of such units and improve their cost-competitiveness, it is learnt. The government may announce these initiatives by end of the year.  

 

According to the documents reviewed by Business Standard, the exercise follows a three-tier format, beginning with cluster-level workshops, followed by zone-level conferences in seven cities in November, and culminating in a national conference later in the year.

 

This comes at a time when a high-level committee, led by Rajiv Gauba, Niti Aayog member and former cabinet secretary, has 

reportedly proposed a set of reforms to simplify procedures and regulations in the MSME sector, among other things.  

 

Speaking about the reform package that is being readied for December launch, a government official said that the MSME ministry aims to submit its recommendations to the PMO by mid-November. ‘’After that the proposals will be 

reviewed in consultation with the 

finance ministry.’’

 

Queries sent to the concerned ministries and government  departments remained unanswered till the time of going to press.

 

The documents show that the consultations are structured around two core objectives — reducing cost and enhancing productivity.

 

MSMEs have been asked to give actionable suggestions on financial and capital costs, the cost of raw materials, logistics and supply chains, marketing, regulatory requirements, and quality standards. 

The ministry has sought suggestions to leverage technology, artificial intelligence, and innovation to strengthen manufacturing across the country. 

 

Inputs are being invited on areas such as industry-grade training, technology infrastructure, venture-capital funding, fund-of-funds mechanisms, and stronger industry-academic linkages to boost research and innovation. 

 

Suggestions have also been sought to improve the intellectual-property regime, including the simplification of processes for patents, trademarks, and geographical indications, so that small enterprises can protect their innovations better and commercialise them.

 

“These reforms are being built from the ground up. Zonal conferences will capture region-specific challenges before the final recommendations are presented at national level," said another official involved in the exercise.

 

“After the MSME ministry submits its recommendations to the PMO, the finance ministry is likely to review the proposals to assess their fiscal implications and policy feasibility before the final reform package is framed for approval,” he added.

 

Legal expert Abhishek A Rastogi, founder of Rastogi Chambers, said MSMEs had long sought a rational tax structure and faster legal resolution.

 

“MSMEs have sought the merger of the 5 per cent and 18 per cent slabs of goods and services tax into a mid-range rate of around 15 per cent. That could go a long way in easing compliance pressure, addressing the inverted duty structure in several cases, and improving cash flow,” Rastogi said.

 

“Beyond taxes, the other pressing concern for small businesses is litigation. Many MSMEs operate far from state capitals, and when disputes reach high courts, distance and cost become barriers to justice. While a few states have multiple Benches, others need to follow suit,” he added.

 

According to the government data, MSMEs contribute nearly 30 per cent to India’s gross domestic product and employ about 300 million, making them the largest source of jobs after agriculture. 

What’s in store for MSMEs

• Reduction in tax and compliance burden
• Boosting productivity
• Improved cost competitiveness
• Leveraging AI and tech innovation to strengthen manufacturing
• Govt may announce these initiatives by end of the year