The Karnataka Small Scale Industries Association (Kassia) has said that the
proposed definition of MSME (micro, small and medium enterprises) will
not help the sector.
Addressing presspersons in Mangaluru on Monday, Basavraj S Javali, Kassia
president, said that the Union Cabinet has come up with a draft completely
revising the definition of MSME making turnover as the basis. As per the
MSME Act 2006, MSMEs in India are defined on the basis of investment in
plant and machinery.
Spike in numbers
However, the proposal for the new definition is in the draft stage, and
requires amendments to be made to the MSME Act and passed in
Parliament.
He said that the proposed definition will bring in large number of firms
within the definition of SME. This is a serious worry as such a thing will likely
crowd out a large number of small units from the benefits targeted at them
as there will be higher demand for such benefits from a greater number of
businesses.
The distinction between manufacturing and service has been removed in the
new definition. This will add to the numbers and negatively impact on the
manufacturing and there-by creation of jobs and enterprise development,
Javali said.
“There is a strong feeling among MSMEs that the investment in plant and
machinery criteria should be maintained with suitably increased limits,” he
said.
Referring to GST on labour charges, he said job works were earlier exempted
from payment of tax under the VAT. However with the introduction of GST,
labour charge is taxed at 18 per cent, which is causing lot of hardship to the
micro and small units who are the main players performing the service for
larger units.
Source: The Hindu Business Line, India Tuesday, 11 December 2018