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Friday, February 21, 2020

Pune: MSME eye ‘stimulus package’ to re-energise sector

Major demands include refinance facilities, better infra in industrial areas, interest rate cuts, relief in filing GST returns, stringent implementation of MSME Act

Written by Manoj Dattatrye More | Pune | Updated: January 29, 2020 10:31:07 am
MSME eye ‘stimulus package’ to re-energise sector There are close to 45,000 small, medium and large industrial units in Pune district. (File)

MEDIUM AND small industries in Pimpri-Chinchwad and Pune, which are facing a difficult phase, are looking towards the Union Budget for a solution to their issues through a ‘stimulus package’ which they hope will include financial assistance, incentives, subsidies and interest rates to re-energise the sector. Union Finance Minister Nirmala Sitharaman will present the Budget on February 1.

The Forum for Small Scale Industries Association has sent a memorandum of demands to the finance minister and is hopeful that some of them will be addressed by the Budget.

Abhay Bhor, president of the association, said there were close to 45,000 small, medium and large industrial units in Pune district. “Of these, around 5,000 are in Pimpri-Chinchwad-Bhosari industrial area and the rest are in Chakan, Talegaon, Shikrapur and other areas of the district,” he said, adding that all were waiting for the Budget to provide a major boost at a time when things were not looking up.

Bhor said the small industries were looking towards a refinance facility, which they were deprived of at present. Citing an instance, Bhor said suppliers or small companies providing material to vehicle manufacturing giants, such as Maruti, Mahindra and Kinetic, had been hit as these large industries had moved to the production of electric vehicles. “Nearly 2,000 to 3,000 such suppliers and companies have been affected as the large industrial units moved their business to electric vehicles, reducing their demands substantially. Banks are reluctant to provide refinance facilities to sick units. Also, if such small-scale industries have to set up new business, the government should provide tax relief.”

The forum, in its memorandum, has also urged Sitharaman to allow the use of corporate social responsibility (CSR) funds to develop amenities in industrial areas. “Industrial areas lack proper roads, toilet blocks, drainage facility and even transport facility. Some CSR funds should be allowed to be used for providing amenities to industrial areas, so as to make the work atmosphere more conducive for the growth of the industries,” he said.

Bhor also said in Maharashtra Industrial Development Corporation (MIDC) areas, it was difficult to get a small plot of land for planning a small-scale venture. “MIDC gives an acre or five acres, which are costly for small industries. The finance ministry should direct MIDCs to provide two gunthas or four gunthas,” he added.

Electricity was another major problem in industrial areas, Bhor said. “The power network set up by MSEDCL (Maharashtra State Electricity Distribution Company Limited) is pathetic. There is a shortage of feeders, transformers and power facilities. As a result, power cuts are frequent in MIDC areas that affects production,” he added.

Sandeep Belsare of Pimpri-Chinchwad Small Scale Industries Association said small industries were in need of cuts in interest rates. “The stimulus package should include incentives, financial assistance and interest rate cuts. Small industries are looking forward to a major cut in interest on loan cash credit, term loan and project loan. Though RBI (Reserve Bank of India) has repeatedly cut repo rate by basis points, banks have not passed on the benefits. We expect the finance ministry to issue directions to banks to cut interest rates by at least 1.25 per cent,” he said.

Belsare also said filing Goods and Services Tax (GST) returns was fraught with issues for small industries. “These issues will increase for small industries from April when new amendments come into effect. If GST returns are not filed in a month, e-way bill generation is stopped and in two months, GST number and bank account will be frozen. The finance minister should provide some relief on this count,” he added.

Belsare further said the finance minister should direct the stringent implementation of the Micro, Small and Medium Enterprises Development (MSME) Act. “Small industries that supply parts to companies or customers do not get their money on time. The MSME Act states that they should get their money in 45 to 90 days. This can happen only when the Act is implemented strictly,” he added.

Even large industries have demanded a stimulus package. Sulajja Firodia Motwani, founder and CEO of Kinetic Green and vice-chairperson, Kinetic Group, said, “The corporate sector is struggling due to credit crunch and demand slowdown, and confidence is at an all-time low. There is a need to give strong stimulus through continued and even more aggressive export incentive policy and boost R&D (research and development) through tax holidays.”

Pramod Chaudhari, executive chairman, Praj Industries India, said, “To deal with the slowdown and improve the business climate, the Budget should renew its focus on strengthening agriculture, manufacturing and infrastructure, which, in turn, will generate employment.”

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