Ease of Doing Business for MSMEs: Micro, little, and medium enterprises (MSMEs) in one of the richest states of India – Gujarat have their expectations set for the newly sworn-in Chief Minister Bhupendra Patel. For the uninitiated, the 59-year-old very first-time MLA Bhupendra Patel is the 17th Chief Minister of Gujarat who comes from the dominant Patidars neighborhood in Gujarat. He had earlier served as the Chairman of Ahmedabad Urban Development Authority from 2015 to 2017 and just before that, he was the Standing Committee Chairman of Ahmedabad Municipal Corporation.
Patel holds a diploma in Civil Engineering and has been a true estate developer. Gujarat had slipped to the 10th rank in last year’s Ease of Doing Business rankings from the major in 2015. However, MSMEs are hopeful of additional reforms in the state beneath Bhupendra Patel-led government.
“Much like the entire country, Gujarat is also driven by the service sector. While there is an industrial policy in the state but there is no separate service policy yet. So, this is one area where we want the government to pursue as it would help MSMEs and other businesses to enhance growth. Moreover, with the expansion of the MSME definition, focus on micro units have been narrowed as more businesses have come under the MSME ambit while a lot of micro and small enterprises, which haven’t raised any credit in their life, have not been able to benefit from the ECLGS scheme,” Pathik Patwari, owner of roofing sheets manufacturer Nexus Infratech told TheSpuzz Online. Patwari is also the Senior Vice President at the Gujarat Chamber of Commerce and Industry.
“At least the state government under the new CM should take some steps for financial support to micro and small businesses or come up with some interest subsidy where it becomes compulsory for banks to lend to these entities,” Patwari added.
The improve in the price of raw supplies such as steel, iron ore, plastics, copper, aluminum, and so on., post-Covid had impacted the working capital of MSMEs across India and consequently their firms also even as the demand had also declined. For instance, pig iron, steel, and copper saw up to 50 per cent rise in costs though cement and PVC pipes witnessed an improve involving 50-one hundred per cent. The price tag jump had rendered MSMEs ineffective in production and income generation.
“The mood among MSMEs is good as the Covid situation has improved a lot in the state. However, MSMEs have concerns around the rising cost of raw materials. Chemical and pharma are doing well but the core engineering sector has certain challenges. The cost of steel, cement, etc has gone up. What government can help with is reserve certain quantities of basic raw materials even if there is a good export price. MSMEs are not getting adequate raw materials to manufacture products. We hope the new CM is proactive,” Abhishek Gangwal, Managing Director, HPS Gases, and President, Federation of Gujarat Industries told TheSpuzz Online.
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Among the other essential asks is a policy about industrial accidents wherein the promoter is not straight accountable but he is made liable for it. Gangwal mentioned as most MSMEs are owner-driven, the owner has to run from pillar to post if anything unfortunate occurs in the firm or factory even if he/she is not the purpose for the incident.
“So, we need a proper policy to ensure that the promoter doesn’t have to bear the actions that also impact the business,” Gangwal added.
Vadodara-based Ashok Patel who runs AB Industries, which manufacture anesthesia and vital care ventilators, mentioned the government procurement of healthcare gear from MSMEs is not adequate even as the government had earmarked 25 per cent of their purchases to be from micro and little enterprises every single year.
Importantly, the healthcare-connected procurement from MSMEs across India had reportedly improved post-Covid, having said that, little firms are looking for preference.
“Central and Gujarat governments are the biggest buyer of medical devices but there is no preference given to the MSMEs sector as the latter has limitations in terms of technology, unlike large enterprises. So, problems MSMEs face is a lack of exposure to the latest technology and methodology. They also don’t have the capacity to develop technology on their own. There must be some preference in procurement for local businesses. For instance, if a hospital needs 100 ventilators, then at least 20 per cent should be purchased from local industry. The government is not buying enough from MSMEs,” Patel told TheSpuzz Online.
In terms of compliance, MSMEs are hunting at a reprieve from Professional Tax of Rs 80-200 per employee they have to deduct and spend to the government. In Gujarat, the tax has to be paid inside 15 days if the employee count is more than 20 employees members and quarterly if there are significantly less than 20 personnel.
“The government can provide relaxation in terms of removing Professional tax or subsidising various stamp duties. This is among the compliance burdens for small businesses. We don’t want the government to go revenue negative and hence, they can get it covered in other formats like Corporation tax, Property tax by increasing their respective tax slabs,” mentioned Patwari.