The ministry of micro, small and medium enterprises (MSME) has sought a nearly 80% hike in budget allocation for 2011-2012, over R2,400 crore in the last budget. The ministry aims to strengthen the Prime Minister’s Employment Generation Programme (PMEGP), expand National Small Industries Corporation (NSIC) and initiate reforms in the Khadi sector.
Laying a special emphasis on the PMEGP, the government wants to earmark more than 50% of the R4,300-crore demand for the segment to generate more jobs across India. Nearly R900 crore has been projected towards marketing assistance, skill development and technological support to entrepreneurs.
Nearly 8% of the total demand is likely to be used for expansion of the NSIC. The two other segments on the government's priority list are the enhancement of the export potential of the Coir Board and the cluster development for traditional artisans, for which nearly R100 crore has been planned.The government may do away or reduce the 2% subvention on export loan to MSMEs.
Meanwhile, the MSME sector has demanded the adoption of a modified Goods & Services Taxes (GST) till the nationwide implementation of the GST.
“Since the GST implementation is getting delayed, we're suggesting a modified GST, which will aid transition to the GST regime,” said Anil Bhardwaj, secretary general, Federation of micro & small and medium enterprises (FISME).
In its pre-budget wish list, the FISME has suggested an amendment in the Central Sales Tax (CST) Act to withdraw the status of 'Registered dealer' from utilities and all such service providers who do not have to collect sales tax on products. “This will help service providers to buy goods from suppliers outside their state by paying 2% CST as against the state VAT of 12.5% levied on purchases within the state,” said Bhardwaj.
The body has demanded tax breaks for “employment intensive” units rather than on the basis of capital invested.