Look for reduction in taxes and increase in credit and aid for innovation
Reduction in taxation, increase in aid for innovation and assistance by way of facilitating credit availability are the dominant themes of the Budget wish-list that small and medium enterprises (SMEs) across sectors have for the finance minister.
“There should not be any registration and payment of excise duty by SMEs with a turnover of under Rs 10 crore, as this amount is not big enough to warrant duty. There must also be added stress on simplification of registration and procedural documentation,” said President SME Chamber of India Chandrakant Salunkhe. Currently, only enterprises with a turnover of Rs 1.5 crore or less need not pay excise duty.
According to the SME Chamber, for companies oriented toward exports, the excise duty exemption limit should be increased to Rs 25 crore. “Start-up companies by young entrepreneurs should get proper support from banks and financial institutions to convert brilliant, innovative and potentially viable ideas into commercial ventures,” Salunkhe said.
For the textile industry, much of last year was a struggle because of high cotton prices and the end of the Technology Upgradation Fund Scheme (TUFS) scheme. This year, textile companies are demanding a reduction in the customs duty on machinery under the export promotion capital goods (EPCG) scheme.
The North Indian Textile Mills Association (NITMA) has asked the finance ministry for cuts in customs and excise duties, which at present are 20 and 10 per cent respectively.
“For the industry to become more competitive in the global market it is necessary that the government allows us support by way of taxation cuts, facilitates working capital for smaller companies and provides technical assistance,” said Ashish Bagrodia, president of NITMA.
The auto components industry, which incurred losses last year due to inflationary pressures on metal and commodity prices, is looking at becoming a $110 billion industry in the next 10 years.
“The primary problems that we face, at present, have to do with the need to augment capacity, the absence of which is a direct manifestation of the absence of capital availability,” said Vinnie Mehta, executive director of the Automobile Component Manufacturers’ Association.
According to Mehta, what auto parts makers primarily want from the budget is provision for infrastructure. Power is a key input for the auto component industry and availability often falls short of requirements.
In the information technology (IT) industry the relatively narrow margins for SMEs lead to slow growth and expansion. The growth in the number of special economic zones (SEZs) that are often occupied by the larger players signifies a loss of competitiveness.
“Relaxation on special economic zone norms would create a more level playing field, since it is tough for smaller players to start operations in an SEZ, given the process of uprooting employees and the creation of fresh infrastructure,” said Kalyan Kar, president of Acclaris Business Solutions, a Kolkata-based IT SME.
Meanwhile, an online survey conducted by tradeindia.com, a B2B portal, revealed that SMEs want the government to use the Budget to announce tax breaks for employment-intensive units; immediate implementation of a modified goods and services tax (GST) that will aid in the transition to the GST regime; uniform VAT rates for all commodities across all states; and budgetary allocations for establishing a technology fund.
In view of steep increases in input costs, 90 per cent of the SMEs that took part in the survey urged the government to continue with the stimulus package, to ensure robust growth of the sector. About 58 per cent said the Budget should come up with a procurement policy whereby public sector enterprises are directed to source at least 20 per cent of their goods and services requirements from MSMEs.
