Revised MSME definition could harm struggling micro units: Traders

The revised definition of Micro, Small and Medium Enterprises (MSME) will put struggling micro units in trouble, said industrialists. In India, 67 per cent of MSME entrepreneurs have a turnover of less than Rs 10 lakh and nearly 99 per cent of less than Rs 1 crore. Under such circumstances, the increase of the MSME investment cap from Rs 50 to Rs 125 crore and turnover from Rs 250 crore to Rs 500 crore looks unrealistic, feel many industrialists and traders here. Most of the industrialists feel that the 1 per MSMEs of the upper level will suck in nearly 95 per cent of the benefits.

Badish Jindal, president of FOPSIA and World MSME Forum, said, “We demand a separate department for the 99 per of MSMEs that have a turnover below Rs 1 crore so that there shall be a level playing field. The funds of CGTSME and benefits of the MSME procurement are already being grabbed by the MSMEs coming under the higher slab.”

Cloth Merchant Association president Sonu Nilibar said manufacturers and vendors had established rapports in their respective businesses. But with the change in the definition of MSME, even the registered MSME manufacturers will have to stick to the new rules.

In the recent Union Budget, Finance Minister Nirmala Sitharaman announced revisions in a few clauses pertaining to the MSMEs, which industrialists felt would bring profits to the big players, while the small MSMEs would have to bear losses. “Earlier only micro and small industries had to stick to the clause of payment after 45 days, but with the change in MSMEs, a part of the medium industry also will stick to the clause of payment to vendors after 45 days,” said Nilibar.