RSS industry wing opposes govt’s move on MSMEs

Nagpur: Laghu Udyog Bharti (LUB), the small industries’ association under the RSS, has objected to the government’s move on changing the criterion to classify micro small and medium enterprises (MSMEs), on the basis of turnover instead of investment. The LUB, which has already taken up the matter with the government machinery, also plans to seek opposition’s support to its demand. It has also expressed reservations against the government’s ease of business agenda, saying it is only helping foreign businesses.
It says measuring MSMEs mainly on the basis of turnover will open the gates for trading companies also. “This will hamper local manufacturing. A quota is reserved for MSMEs under government purchases. Once trading firms fit in the criterion too, there is a likelihood of cheap Chinese goods capturing the business,” says LUB

Since the turnover can be tracked through GST, the government finds the new system to be foolproof as against measuring the investment but LUB says it has its own reservations.

The earlier definition considered investment in plant and machinery for classifying an MSME. This restricted the entry to manufacturing units to the MSME fold. This is because the assets are only acquired by a manufacturing units. A unit with investment of Rs25 lakh is a micro unit, it is Rs5 crore for a small and Rs10 crore for medium enterprises.

There is a separate criterion for service sector which also based on investments. This mainly covers IT industries and those engaged in job-works. The investment limit ranges up to Rs15 lakh and Rs3 crore here.

“The LUB teams has so far met the persons concerned in the government to exert its pressure on the issues. Since it is part of Sangh Parivar, all sources within the organization will be tapped. If this does not work, LUB will also be taking the help of opposition leaders,” said LUB national president Jitendera Gupta.

He further said the new norms may even disrupt the Make in India programme of the government. “If the turnover is to be the yardstick, any business entity will get the MSMSE tag, bringing it all the benefit attached to the sector,” Gupta said.

The LUB president said the government should also limit the MSME classification to business having Indian ownership. This is because the turnover criterion brings any industry within the ambit irrespective of the ownership, he said.

The turnover limit has been set at Rs5 crore for micro units, Rs75 crore and Rs250 crore for small medium enterprises respectively. This will also widen the scope bringing in much bigger units into the MSME category. It can throw the existing MSMEs classified on the basis of investment out of business, said Gupta.

MSMEs come under the priority lending sector for the banks. A large chunk of the pie is likely to be taken away by the firms on the basis of the higher turnover. A large section of existing MSMEs cannot clock as much sales, he said.