July 2, 2020

RSS trade body calls new MSME defintion detrimental to Atma Nirbhar Bharat, seeks PMO intervention

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KEY HIGHLIGHTS

  • RSS-affiliate Laghu Udyog Bharati expresses displeasure over the new MSME definition, claims the move would allow large corporates, MNCs to indirectly control manufacturing sector via subsidiaries
  • The industry body seeks urgent PMO intervention into the issue and also directive to concerned departments for corrective action
  • Removing the distinction between a manufacturing and a service enterprise, the government has substantially raised the investment and turnover criteria for MSMEs
  • As part of the new definition, exports will not be counted in turnover for any enterprises whether micro, small or medium

Stating that the new MSME classification criteria will defeat the Atma Nirbhar Bharat (self-reliant India), RSS-affiliated Laghu Udyog Bharati has sought urgent intervention from the Prime Minister’s Office (PMO).

The MSME trade body has said that the change in definition of MSMEs will allow large corporates and multi-national companies (MNCs) to have indirect control of the manufacturing sector in India through their subsidiaries.

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“It will also promote trading of imported goods rather than manufacturing and innovation in our country as there is no direct incentive for the Micro and Small Industries (MSIs) to do so. The inclusion of service enterprises and trading services with increased turnover limits will provide all the privileges of MSIs to them by depriving the MSIs,” said a statement jointly issued by Laghu Udyog Bharati President Baldevbhai Prajapati and Secretary General Govind Lele.

Removing the distinction between a manufacturing and a service enterprise, the government has substantially raised the turnover criteria for MSMEs, thus covering a large number of firms into its fold.

As per the new definition, an enterprise with an investment of Rs 1 crore or less and annual turnover of upto Rs 5 crore will be considered a micro enterprise. The investment limit for small enterprise tag has been raised to Rs 10 crore while turnover limit increased to Rs 50 crore. For medium enterprises, investment limit has been increased to Rs 50 crore while turnover limit is capped at Rs 250 crore.

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As part of the new definition, exports will not be counted in turnover for any enterprises whether micro, small or medium.

“These kinds of exclusions and the substantial increase in the previous limits, together are likely to provide a window for the medium and large scale industries to indirectly squeeze in the MSME space, exploiting the concessions and privileges, especially like the priority lending norms given to the banks for the MSME sector and the 25 per cent purchase reservation policies for the government departments and PSUs,” the RSS associate said.

It further said that the changes notified through a gazette notification will certainly lead to the already beleaguered MSIs to face further hardships as they are incapable of competing with the mighty medium and large-scale industries.

The trade body has urged PMO to take immediate cognisance of the issues and direct concerned departments to take corrective actions.

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