 "Photo: Anoushka Swahney")
On the outskirts of Meerut thrives the sports goods manufacturing hub where work is in full swing.
While testing a leather cricket ball, Lokesh Kumar Sharma, a senior partner of VATS Sports, praises the goods and services tax (GST) regime brought in by the Bharatiya Janata Party (BJP) government at the Centre. “It has worked as an accelerator in our nation’s progress and streamlined the operations,” says Sharma.
The view of Sharma is shared by the owners of other micro, small, and medium enterprises (MSMEs) dealing with sports goods manufacturing in the area.
“A 5 per cent GST is now levied on clothes. It is helping us since we had to bear the expense of buying untaxed fabric,” says Shivinder Sharma, chief executive officer of Active Sports.
The BJP’s manifesto, titled ‘Modi ki Guarantee 2024’, promises to simplify GST compliances and laws, provide digital credit, and streamline the tax portal for MSMEs.
Aditya Jain (name changed) from GEM, another sports goods MSME in the area, praises the reduced paperwork and travel for business processes thanks to GST. “Previously, even to submit a paper, we had to travel 15 km and give money to get the work done. Now, it’s better.”
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However, for pharmaceutical distributors, it is different.
Pharma distributors in Muzaffarnagar and Meerut are concerned about disrupted local trade and unexpected tax notices.
“We are being sent notices for an error of Rs 2 from four years back, which was not the case earlier,” rues a small pharma distributor with the condition of anonymity.
According to Section 43B(h) of the Income Tax Act, effective April 1, companies are supposed to pay MSMEs within 45 days of the agreement. More than 182,000 complaints were filed by small businesses to claim over Rs 42,000 crore, according to data from the MSME Samadhaan Portal as on March 31.
The highest amount was to be paid by state governments (Rs 5,886.9 crore), followed by central public sector undertakings (PSUs) (Rs 5,074.4 crore), and proprietors (Rs 3,747.7 crore).
While Shivinder Sharma praises the government for timely payments, Lokesh claims otherwise. “We haven’t received payment from a state PSU for seven years."
Santosh (name changed) from Quality Flavours Exports, a mint essential oils manufacturer in Moradabad, is waiting for a payment whose deadline was extended to 90 days from 45 earlier.
A brass and iron manufacturer flags the rising cost of raw materials. “We are now thinking of alternative work,” he says.
Around 60 per cent of the amount payable in disposed applications was settled by the Micro and Small Enterprise Facilitation Council as on March 31. Central PSUs had settled the highest amount, with Rs 1,075.2 crore, followed by state governments (Rs 786.5 crore), and proprietors (Rs 407.7 crore).
Lokesh highlights the government’s protection of MSMEs in their tenders and improved access to bank loans. However, the Government e-Marketplace (GeM), an online platform to procure directly from MSMEs, is a concern. “Half of our business is dependent on GeM. The portal has helped us get tenders from across India but the re-auction bid affects our profitability.”
According to a Rajya Sabha reply, MSMEs contributed 29.1 per cent to the country’s gross domestic product in FY22. It was higher at 30.5 per cent in FY20.
