With rising commodity prices, FISME wants the abolition of import duties on steel, copper, aluminum and polymers.
(Representational Image; Source: ShutterStock)
The Indian micro, small and medium enterprises have not had it easy for five years now.
There was demonetisation, a tax regime that was rewarding and demanding in equal measure, a bankruptcy code that deprioritised dues owed to MSMEs, and finally the pandemic and rising commodity prices.
Therefore, ahead of the Union Budget 2022, the industry body has its list of demands ready.
First on the list is amendment of the Insolvency and Bankruptcy Code (IBC). The Federation of Indian Micro and Small & Medium Enterprises (FISME) has asked for this to secure the dues of the MSMEs Corporate Insolvency Resolution Process (CIRP).
FISME said that, at the time of the resolution/liquidation of large client companies, MSME suppliers are treated as “Operational Creditors”, and operational creditors’ dues are mostly written off with little or no recoveries.
"As one large corporate entity would have many MSME suppliers, a large debtor becoming insolvent has a snowball effect. All of this is despite the MSME Act which provides for timely payment of MSME dues which stand overruled by the IBC," it said.
The Federation wants MSMEs to be classified as a separate sub category, under the existing Operational Creditors category, and their dues to be prioritised over other operational creditors’.
It also sought restoration of the interest-subvention scheme with retrospective effect. Under the scheme, large manufacturing and merchant exporters used to get an interest subsidy of 3 percent on pre- and post-shipment rupee credit for the outbound shipment of 416 products, while manufacturing MSMEs used to get a 5 percent subsidy on such credit to ship out any product. The scheme had been withdrawn on September 21, 2021.
With rising commodity prices, FISME wants the abolition of import duties on steel, copper, aluminum and polymers; and with GST registration for selling online entailing high-compliance cost, the federation wants the registration requirement to be done away with.
FISME said in order to help the MSME sector tide over the impact of demonetisation, GST rollout and the Covid19 pandemic, the government should suspend the pre-pandemic guidelines on Special Mention Accounts (SMA) rating and Bank Loan Ratings (BLR) for three years.
