A year that started with the impact of demonetisation and continued with uncertainties due to the introduction of Goods and Services Tax (GST) ends with hope for the Micro, Small and Medium Enterprises (MSMEs), according to industry sources.
“With demonetisation and GST, the industries are unable to get long-term contracts now,” according to the secretary general of the Federation of Indian Micro and Small and Medium Enterprises (FISME), Anil Bhardwaj.
The immediate impact of demonetisation and GST will [soon] be over and firms should start reaping the benefits of an efficient system in 2018, he said.
MSMEs are spread across sectors such as automotives, textiles, and engineering and in places such as Pune, Chennai, Ahmedabad, Coimbatore and Rajkot.
While demand dropped 20%-25% for MSMEs across sectors this year, fixed expenses remained static for the units. Micro units that were catering to seasonal demands were the worst hit because of demonetisation and GST, apart from those doing job work.
‘First time’
This is the first time that units doing job work have been brought under the Central Government’s tax directly. “We are talking to the government to cover these units under the composition scheme,” he said. Further, State governments should also come out with procurement policies similar to the one introduced by the Centre, he added. “This will give a boost to government purchases from the MSMEs.”
“There are a couple of initiatives from the Central government which will benefit MSMEs,” said V. Sundaram, president, Coimbatore District Small Industries Association.
“For instance, it has introduced online finance facilitation by National Small Industries Corporation. The market has picked up since November and the industry is expected to do well next year across sectors.”
