The provision of extending non-tax benefits to Micro, Small and Medium Enterprises (MSME) for three years after the industry graduates to higher category has evoked mix response from the city-based industrialists.
Those opposing the decision have claimed that there was no logic in continuing the non-tax benefits to MSMEs jumping into higher category of large-scale industry, as they had attained a level at which they didn't need government assistance.
They claimed that though the decision was taken with a purpose to help MSMEs, it would only hurt their interests.
While another section of industrialists are in favour of the decision, saying it would help promote the MSMEs to reach higher levels.
Federation of Association of Small Industries of India (FASII) president Badish Jindal said the move to extend tax benefits to units which jumped to a higher category would in fact usurp the rights of MSMEs.
Opposing the decision, Rakesh Gupta, executive member, United Cycle and Parts' Manufacturers' Association (UCPMA), said the decision taken with a purpose to help MSMEs would indirectly discourage them.
One the other hand, Narinder Bhamra, president, Fastener Manufacturers' Association of India, approved of the decision, saying it would help promote the MSMEs.
“The decision will encourage the industry to work better and move to the category of large industry,” he said.
Similarly, Pradeep Wadhawan, secretary, UCPMA, said the decision would ensure that the MSMEs doing well were promoted to a large category, which would help the industry and people alike.
The central government extends several non-tax benefits to the MSMEs with a purpose to promote them. Some of the benefits include mandatory 20% purchase from MSMEs by any central or government department; 15% of price preference to smaller units while purchasing material from MSMEs and large industry and some other benefits.
The decision is imperative for the city-based industry, because as per an estimate, more than 95% of the industry here is from the MSME category.
Finance minister P Chidambaram in his budget speech had said that too many MSMEs did not grow because of fear of losing benefits associated with staying small and medium.