Union Finance Minister Arun Jaitley chose his penultimate Budget before the next general elections to announce specific sops for the Micro Small and Medium Enterprise (MSME), ranging from a Rs 3,794-crore credit support to higher custom duty on auto components. The Budget makes ample provision for the sector, he said.
The Budget has, however, evoked mixed reactions from the MSME sector in Pune and Pimpri Chinchwad.
Presence of automobile giants like Tata, Volkswagen and Mercedes Benz — and the large base of their vendors — has earned Pune the moniker of ‘Detroit of the East’. Over the years, Pune, especially the industrial township of Pimpri Chinchwad, has developed into a major automobile hub. It is estimated over 4,000 MSMEs are based in the industrial area of Pimpri Chinchwad, employing over four lakh people. The annual turnover of the sector is over Rs 1,500 crore. Most MSMEs deal in auto components.
Sandeep Belsare, president of the Pimpri Chinchwad Small Scale Industries Association, was cautious about the Budget, saying the trick would lie in its implementation. “The finance minister has talked of a corpus for credit support, funding and innovation. But his speech did not mention anything about banks being asked to provide collateral free loans to the sector. Without such directions, it is of no use,” he said.
NPA management and revival of sick units did form part of the finance minister’s Budget speech but Belsare said there were no clear guidelines on how it will be done. “The need is to ensure proper implementation of schemes, which unfortunately is not happening,” he said.
If Belsare was lukewarm about the Budget, Anant Sardeshmukh, director general of the Mahratta Chamber of Commerce Industries and Agriculture (MCCIA), felt the Budget would help the sector increase its business. “The decision to reduce corporate tax by 5 per cent for companies with a turnover of up to Rs 250 crore will help just a fraction of the companies. Most MSMEs have already benefited from a similar cut in the last Budget,” he said.
For Pune, Sardeshmukh felt the decision to increase custom duty from 7 per cent to 15 per cent on auto components will help the sector. “With 90 per cent of Pune’s MSMEs in the automobile sector, this will give a boost to them. Auto majors will focus on local procurement rather than imports,” he said.
Abhay Bhor, PCMC coordinator, Laghu Udyog Bharati, a national-level confederation of the MSME sector, echoed Sardeshmukh’s sentiments. “Overall, the Budget is a mixed bag for the sector. The custom duty hike will certainly help companies in the automobile sector,” he said.
If small and micro enterprises were cautious, midsized companies gave it a thumbs up. Pravin Patil, MD & CEO, Starkenn Sports Pvt Ltd, felt it’s a balanced Budget.
“The extension of 25 per cent corporate tax benefit to organisations with turnovers of up to Rs 250 crore is a mega boost to all MSMEs which have high valuation and sales. This will leave companies with higher investible surplus, which in turn will create more jobs,” he said.
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