Eyeing revival for micro and small enterprises that faced stress on various fronts, the ministry of micro small and medium enterprises (MSME) has in its Budget proposal asked the government to implement the recommendations of the report of the inter-ministerial committee submitted last July.
A source close to the development told The Indian Express that the ministry has already submitted its Budget recommendations to the finance ministry and has sought actions that may lead to the revival of the sector that is also the biggest employment generator in the country.
“It is time now to consider the recommendations of the inter-ministerial committee report and it has been proposed to the finance ministry to consider it in the Budget 2014-15,” said the source who did not wish to be named.
The report submitted by the committee under the chairmanship of the then finance secretary RS Gujral, called for an additional interest subvention of 2 per cent for exporters who repay on time and also asked for banks to target atleast 40 per cent export credit to MSMEs. It also proposed that target for banks to increase MSME borrowers should rise by 10 per cent every year till 2017.
The committee, that included people such as commerce secretary SR Rao, the then revenue secretary Sumit Bose, MSME secretary Madhav Lal, and the then chief economic advisor Raghuram Rajan, had also proposed to modify labour laws and provide taxation benefits and marketing support among other things.
Other than that, the ministry has also asked the government to address issues relating to funding of companies when they are starting up or expanding or even shutting down. Similarly, it has also sought tax benefits to encourage entrepreneurship so that new enterprises can come up.
The source said that the ministry has also prepared a presentation to be given to the Prime Minister where steps required for the revival of MSMEs would be highlighted.
In the meantime, the ministry is also looking to revise the criteria for companies falling under MSME.
While as of now the companies that invest up to Rs 10 crore in plant and machinery fall under the definition of MSMEs and thereby qualify for the benefits available to them, it has been proposed to raise this cap to Rs 20 crore which will allow slightly bigger companies to also fall within MSME ambit.