Consortium of Indian Associations (CIA) and 40 partner SMB associations including COSIA Vidarbha released the findings of a Mega Survey conducted by them for status of MSME units after the lockdown in which 81000 Self- employed and Micro/ Small Businesses (SMBs) from across India responded.
The respondents included manufacturers (49%), service providers (15%), self-employed (14%), and consultants, start-ups, traders, food and hospitality and others. The 63 million micro, small enterprises (MSEs) and 40 million self-employed individuals in the country form the backbone of India’s economy, The COVID-1 & 2 induced lockdowns over the last fifteen months have severely crippled this sector, as revealed in the findings of the report.
Some key highlights include 73% of SMBs have not made any profit during the last FY, 42% unable to decide on retention of employees, 88% of respondents yet to avail any of the stimulus packages introduced by the Government of India & ease of doing business practically facing various hiccups.
K.E. Raghunathan, Convenor of CIA and former National President of All India Manufacturers’ Organization, said that over the past year, CIA has provided vital suggestions and modifications required on several initiatives taken by the Central and State Governments for the benefit of MSMEs. As a result, we realised that a data-backed survey would help consolidate the feedback from this sector, to bring out the pain points and provide solutions and a way forward to revive the sector.
The report espouses that the government needs to adopt a three-pronged approach towards SMBs viz. Exempt, Protect and Support, to mitigate the challenges currently being faced by the sector. CA Julfesh Shah Chairman COSIA Vidarbha said that MSME needs to be exempt from statutory compliances, penal actions and litigation,and must gate protection from the high interest burden, price wars, high cost of raw materials, losing employees, penalties, and late fees. Further MSME needs support by way of liberal loans, clearing off the pending dues, offering moratorium with interest waiver, and not declaring NPAs for a year.
CA Shah further said that survey reflected that 28% of SMBs reported that they are unable to get their payments dues from their customers both in the private as well as the Government sectors, as either the amount is less than Rs 10 lakh or they are unable to follow up or spend on legal recovery or fear losing further business or the customer has wound up business.Mr.Madhusudan Roongta, President of Chandrapur Industries Association said that in the survey findings 68% of SMBs cannot service the high-interest burden for existing loans, especially when the Govt has not allowed them to perform and are worried about how to meet the growing higher outflow every month.
Also regarding Credit for Raw Material, 36% of them cannot rotate cash and sustain their business cycle, and it reduces their ability to increase their turnover/profitability. K.E. Raghunathan, further said that though the Government talks about the ease of doing business, SMBs continue to be governed by complicated and outdated laws and dispensable compliances. The report recommends that the Government should, in turn, revisit/scrap/redraft these laws.
A suggestion for a separate SMB MINISTRY, for the Self-Employed and Micro/Small businesses has been made, so that issues specific to this sector can be looked into and attended to properly.CIA also highlighted a series of long term and short-term measures to the Central and State Governments to beat the impact of the lockdown on the SMBs, which includes on GST vows, pending payment collections, extensions, and relaxations, NPA classifications, refinancing options, opening fair price shops for raw material supplies, ban on exports of steel and cement for six months, fixation of Remission of Duties and Taxes on Export Products urgently and refund to exporters dues since January 2021, exemption of GST rate of 18% for vehicle insurance and medical insurance till March 2022 , increase in ECGLS allocation and relaxation in the norms of eligibility of restructuring and exemption from EB fixed charges , Property taxes , MoDT charges from State Governments till March 2022.CIA has also proposed to start collecting data of Self-Employed, MSME businesses in the country from banks.
Based on this data, the business type could be correctly classified as traders, professionals, service providers, exporters, engineering enterprises, etc, as well as on employees in them both migrant and formal.The Consortium aims to submit the data-backed report and findings to Hon’ble Prime Minister Narendra Modi, Union Minister of Finance Nirmala Sitharaman, Union Minister of MSME Nitin Gadkari, Union Minister of Commerce and Industry Piyush Goyal, and to all state chief ministers.