MSME ECOSYSTEM IN INDIA

The MSME ecosystem has take a step forward when the MSMED Act was passed 2006, but issues remained. MSMEs had to shell out anywhere between Rs 5,000 to Rs 50,000 to receive certification. This government in its push for Ease of Doing Business, abolished the need for certification which used to be provided by the district industry centres or district industry offices and made the certification procedure online on the basis of self certification. The government also initiated a host of changes like Samadhan, which is enabling recovery of payments due to MSMEs, Sambandh which promotes procurement by public sector units from MSMEs, Interest subvention for MSME loans, MUDRA Small loans, Reservation of 3% for women entrepreneurs in public procurement policy and reservation of 4% for SC/ST entrepreneurs. MSMEs surveyed gave a big thumbs up to the work of the Central Government headed by the prime Minister Narendar Modi and the survey has revealed that 59.56% of MSMEs rated the MSME ecosystem better than earlier, while 28% felt that it was worse than earlier, and 12.21% felt no change at all. States where large numbers of MSMEs perceived positive change due to central government initiatives are Uttar Pradesh (72.72%), Maharashtra (67.79%) and Delhi (66.05%).
Despite the fact that lots of people criticised GST for the way it was implemented, MSMEs across the country have welcomed it. 62.13% of MSMEs surveyed, termed GST as the single biggest reform or that it made running business easier, though 9% of MSMEs said that more work is needed to implement GST. Only 28% of MSMEs held introduction of GST responsible for MSMEs going out of business or for GST making business tougher for MSMEs.
States where MSMEs have been highly positive about GST are Uttar Pradesh with 77.49%, Delhi with 77.25%, Haryana with 70.49%, Maharashtra with 69.40%, Madhya Pradesh with 69.13%, Andhra Pradesh with 69.08%, Kerala with 67.88%, Rajasthan with 66.92% and Tamil Nadu with 65.03%.

On the other hand, states including Gujarat with 44.07%, Jharkhand with 46.69% and West Bengal with 46.19% show the least number of MSMEs calling GST a positive move for MSMEs.

Issues facing MSMEs were collected from various feedback mechanisms by the India SME Forum and then redesigned, which was inturn shared with respondents, as a part of the questionnaire in October 2018.

MSMEs have given various suggestions and we have ranked these based on the states which they belong. These suggestions have been ranked according to their importance, which should serve as a roadmap for the government and policymakers.

MSMEs surveyed from all over India ranked from 1 to 8 with 1 as the highest priority issue.

1. Improved access to credit from financial institutions and interest subvention on finance from banks and NBFCs
2. Plug and play industrial estates, special manufacturing services and export zones with infrastructure and power for MSMEs

3. GST rate subvention for MSMEs across sectors as well as inclusion of all MSMEs in GST for better opportunities and competitiveness
4. Tax rebate for capital investment in technological, production automation and infrastructure upgradation
5. Skill training and employment incentives, tax rebates to train as well as employ inexperienced and fresh trainees
6. Ease of keeping, maintaining and reporting records or filings through one stop accounting, invoicing, compliance portal with the Ministry of Company Affairs, Income Tax and GST–all on a single platform for MSMEs and a single source government platform, instead of private companies, offering software for accounting or filing returns.
7. Restructuring of banking and export facilities in case of impugned cash flows and market distortions
8. Support for testing, improvements and certification for international standards, registrations and market certification to enable international market access.

The entire survey is like a white paper that has been published on behalf of the MSMEs which chose to answer the questionnaire, in the hope of witnessing systemic and policy changes, which could help create a more vibrant entrepreneurial ecosystem in India.

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