Editorial of the Day: An Opportunity to make our MSMEs Competitive and Self-Reliant (Indian Express)

Context of the Article: The Union Budget 2023 presents an opportunity for our government to increase its efforts towards making our MSMEs competitive and self-reliant.

Author’s Views

• India as an Economic Bright Spot: Despite concerns of a looming global recession, supply disruptions, and the Russia-Ukraine war, India has stood out as a bright spot, growing faster than most major emerging markets.
• MSME’s Contributions to India’s growth: The 6.3 crore micro, small and medium enterprises, account for 30 percent of GDP and employ nearly 11 crore people.
  • Sales in several industries across the MSME sector reached 90 percent of pre-pandemic levels.
• How did they achieve?
  • This is due to the government’s intervention such as extending the Emergency Credit Line Guarantee Scheme, overhauling the Credit Guarantee Trust for Micro and Small Enterprises, and rolling out the Pradhan Mantri Employment Generation Programme to boost self-employment.

How can Government make MSMEs Resilient?

• Streamlining input tax credit for e-commerce suppliers: Suppliers selling on e-commerce platforms need to procure input services like logistics, which are taxed at 18 percent.
  • This leads to precious working capital getting blocked without any visibility of future realization, potentially discouraging suppliers from adopting e-marketplaces.
• Lowering GST rates on input services: Fixed expenses such as electricity, rent, employee wages, adequate working capital is a must for small businesses.
  • By lowering GST rates on input services availed by online sellers, the government will not only shore up their finances but also give a boost to their digitisation journey.
• Need to expedite GST relaxation for small online businesses: GST Council announced a relaxation of rules for small businesses looking to go online.
  • Mandatory GST registration was waived for small online vendors with a turnover of less than Rs 40 lakh and Rs 20 lakh for goods and services, respectively. This will take time to get implemented.
• National Logistics Policy: The National Logistics Policy can also be leveraged to make our MSMEs competitive.
  • The NLP aims to bring down logistics costs as a percentage of the GDP from 13-14 per cent to 8 per cent, on par with developed nations.
  • Unparalleled reach of Indian Railways can be synergised to ship wares to the remotest parts of the country quickly and cost-effectively.

Conclusion

• With the government charting out the nation’s growth path, the budget would deliver on the challenges for MSMEs and take us closer to the dream of an Atmanirbhar Bharat.

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