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2014-10-17

Single law, exit policy can boost SME growth: Report

There is an opportunity to consider a gradual transition plan for MSMEs over the next decade to be in line with global MSME in developing nations.

A single comprehensive MSME law, including labour law, Factories Act, Land Acquisition Act, 25 per cent land allocation in all industrial corridors, and an exit policy (on the lines of Chapter 11 in the US) are among the initiatives suggested by the industry to create ‘new wave’ Indian medium, small and micro enterprises (MSMEs), as reported by Business Line.

 

“There is an opportunity to consider a gradual transition plan for MSMEs over the next decade to be in line with global MSME in developing nations,” says a report by CII-KPMG released in the two-day CII Global MSME Summit here.

 

Action agenda

 

Outlining an ‘action agenda’ for the Government to reach the goals of Make in India, Skilling India and Digital India, the report also suggested a technology upgradation fund for the plastic processing sector and separate consideration for agriculture and food processing business, especially start-ups.

 

The sector, which sees lack of credit availability, market access and delayed payments as key challenges, will also do well with certain financial incentives, says the report. It, therefore, suggested direct and indirect tax benefits by way of zero tax for the first five years (micro enterprises), 10 per cent slab for 10 years (small enterprises) and 15 per cent tax slab for 15 years (medium enterprises).

 

An effective policy to deal with delayed payments to MSMEs by large companies on a timely basis and a national procurement policy for public and private enterprises for specified areas is also required, says the CII-KPMG report. The report reiterated a long-standing demand by industry — a change in the definition of MSME.

 

“We must appreciate that each sector has its own unique capital requirement and standard revenue and growth rates.

 

“Hence, in today’s complex business environment, turnover and number of employees are becoming more relevant matrices for consideration of coverage,” it said. It said globally, annual turnover, headcount and potential export revenues were some of key metrics being used to define the MSME sector.

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