The Union Budget may have rolled out a red carpet for start-up SME firms, but the existing micro, small and medium enterprises (MSME) do not find any direct largesse of the Budget proposals for small businesses.
The state of Punjab, that has close to 2,50,000 MSMEs are feeling totally left out in the maiden Budget of the Narendra Modi government. The industry in Punjab has been severely affected by the scarcity of labour due to growing employment opportunities in eastern and central part of India and restricted movement of labour towards Punjab.
Industry in Punjab industry had asked the finance minister to link the Mahatma Gandhi National Rural Employment Guarantee Scheme (MNREGS) to MSMEs. "This could have helped in solving the problem of labour scarcity to some extent," said Anuj Kapoor of KMP Manufacturing. The Budget was not in line with the demands of engineering goods industry, he said.
"We were expecting an increase in the excise limit from Rs 1.5 crore to Rs 5 crore which remained untouched in the Budget. Further, we were expecting that the finance minister might make some provisions regarding lowering the interest rate for SME borrowings to meet their capital needs, which was again not addressed."
Most industry clusters of Punjab are languishing as the tax holiday offered in Himachal Pradesh, Uttarakhand and Jammu and Kashmir lured companies to such states. Exorbitant land cost and high power tariff have also put the industry on the back foot in the past few years. The lack of growth of industry and saturation in agriculture had led to a proliferation of drug peddlers in the state. An impetus to the small industry would help engage the youth in gainful activities and channelise the resources in right direction.
"The steel cluster of Mandi Gobindgarh, which was hoping for a rollback in Custom duty of steel scrap (the major input for SMEs), did not get any relief," said Mohinder Gupta, Director Gian Castings, and President of Mandigobindgarh Roller Mills Association.
The demand stimulus may come as a result of infrastructure and urban development, proposed in the Budget, but there might be no direct impact on the secondary steel units. The revision of duty on flat rolled steel from 5 per cent to 7.5 per cent will not help the secondary steel manufacturers, he added.
Small entrepreneurs did not find the proposal of 15 per cent investment allowance for investment Rs 25 crore any use for MSMEs and suggested that the slab should have been lowered to incorporate existing MSMEs.
Manu Indrayan, the Managing Director of Indian Clothing League Limited, said, "The delay in payment of claim under TUF puts the SMEs under stress as banks charge the full rate of interest upfront and we have to pay for the timelag (the period between the money raised from the bank by the firm and the reimbursement under TUF scheme)."