With an eye on improving ease of doing business in the MSME sector, industry body Ficci has written to the Prime Minister's Office suggesting ways to tackle contentious issues, including land acquisition, 'inspector raj' and regulations and their compliance.
In an agenda paper titled 'Ease of Doing Business: Recommendation for the MSME Sector', presented to the PMO, Ficci-Confederation of Micro, Small and Medium Enterprises (Ficci-CMSME) said there is an urgent need for a stable land policy that balances interests of all stakeholders.
"Industry needs confirmed availability of land at an affordable rate over the long term," it said, adding that the government should consider developing industrial estates exclusively for MSMEs with sound infrastructure base.
Stating that land is a scarce resource, it further said state governments should look at developing 'flatted factories' with a plug-and-play concept and the Centre should incentivise them to build such factories at existing industrial estates at least in urban areas for MSMEs.
Drawing attention of the government to inspector raj, the paper said: "The experience of MSME units with inspectors is not at all congenial and the inspectors are often dreaded.
"In fact, the inspectors themselves lack understanding of rules and there is a general lack of awareness. Inspection officials are not objective and harassment is rampant. There is an urgent need to minimise inspector raj."
In case MSME units are found lacking in compliance with certain norms, then the role of inspectors or inspection agencies should be to help or support the units in complying with these norms. However, if an MSME unit fails to comply despite the mentoring provided, they should be appropriately penalised, it suggested.
On regulations and compliance, Ficci-CMSME said: "The list of regulations to be complied with remains unreasonably long for an MSME unit. In addition, there is disconnect between agencies formulating the rules and those responsible for implementing them on ground."
It called for minimisation of human interaction by shifting routine submissions such as registrations to an online platform and suggested that repeated filing and reporting of information should all be Web-enabled. Besides, it also called for introduction of self-certification and third-party certification in various laws.
Calling for simplified labour law procedures that are both employee- and employer-friendly, it said: "While on one hand workers should be assured of adequate protection, on the other the employer should have the flexibility to adjust workforce during the course of business cycles. However, at present, labour laws are quite cumbersome."
It added: "The government should consider introducing a single form for compliance and deposit of Provident Fund (PF) and Employees' State Insurance (ESI). This would help save time and efforts and improve compliance.
