Punjab MSMEs wants incentives

Ahead of next month's Union Budget, the micro, small and medium enterprises (MSMEs) in Punjab are looking forward to incentives and proactive steps from the central government, noting that such steps will boost the sector as a driving force of the country's economy.

A wish list the state's MSMEs primarily seeks a doubling of the central excise exemeption limit for the enterprises - from the present Rs 1.5 crore (Rs 15 million) to Rs 3 crore (Rs 30 million). This, they say, will help the sector sustain its business.

Secondly, the rate of interest for the units should be 10 per cent or less than that so as to enable the MSMEs to repay their loans easily, the Punjab Chamber of Small Exporters said on Monday.

Further, there should be tax exemption for the SSI units for at least five years, provided they show an annual growth of 20 per cent during that period of time, according to Ashwani Kohli, the chamber's vice-president. "We are pinning all our hope on the Budget, with our wish list," he told Business Standard.

The past few years have seen a constant decline in the number of SMEs that are grappling with several problems. "These are not only a cause of concern for the state, but the centre as well."

The official noted that volatile steel prices were an area of concern for the exporters, as there was no surety about the price at which steel would be available.

"The governmet should rationalise the cost of the raw material. It should be offered to MSME exporters at a uniform price across India, irresspective of their location," he added. "For the exportable finished goods, there should be a 50 per cent concession in the railway freight to carry them to ports."

The sectors wants the government to simplify the procedures for the SMEs. Also, there should be a resumption of the 100 per cent income tax exemption under Section 80 of the HHC on export profit. (The clause was withdrawn in 2004.)

The Northern Chamber of Medium and Small Industries has echoed similar sentiments. Its president Sharad Aggarwal sought emphasis on research and development (R&D) if the SMEs sector were to realistically compete with its counterpart in China. "To boost our R&D activities, the government should offer a 150 per cent weighted deduction to the SMEs in a simplified manner," he added.

Also, there should be tax benefits for the exporters. "We expect the centre government not to further delay the implementation of the GST (goods and services tax) regime," Aggarwal noted. Currently, there is a lot of scruitiny of cases in the MSME sector. We want them to be limited, and made time-bound. Not just that, we want the interest subvention on our sector (being labour-intensive) to be doubled from the current 2 per cent. This will help us procure more orders from foreign customers and provide generate employment."

Another SME player stressed on the formulation of a Technology Upgrade Fund Scheme for the engineering sector. It felt that this would help the country achieve the desired exports target (to double) in three years, besides boost other measures. Its spokesperson further stressed on tax incentives for those units that were planning to upgrade technology.

Technology upgrade would ordinarily mean the induction of state-of-the-art or near state-of-the-art technology.

The units in need of introducing facilities for in-house testing and on-line quality control would qualify for assistance, as this was a case of technology upgrade. Such a scheme must be made available for sourcing capital goods, besides machinery, equipment and clean technologies.