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Rediff.com  » Business » 'Nothing in the Budget for MSMEs'

'Nothing in the Budget for MSMEs'

February 02, 2017 12:58 IST

'Our concern is about today and there is nothing in the Budget for the MSME sector to feel positive right now.'

In December 2016, V Sundaram, president of the Coimbatore Small Scale Industries Association, along with Vanitha Mohan of the Indian Chamber of Commerce and Industry and K K Rajan of the Southern Indian Engineering Manufacturers Association, met Union ministers to prevail upon them the difficulties the micro, small and medium enterprises sector in Coimbatore faced because of demonetisation.

When Rediff.com's Shobha Warrier spoke to him after the meeting, he was hopeful of the situation getting better by January.

It was a disappointed Sundaram who spoke to Rediff.com from Coimbatore after the Union Budget was presented on Wednesday.

Are you happy with the Budget? There is a reduction in income tax from 30% to 25% for MSME companies...

We expected a lot of stimulus packages from the government for the MSME sector as we suffered the most due to demonetisation.

Unfortunately, there is nothing for the sector in the Budget.

The tax reduction you are talking about is applicable only to a small percentage of the MSME sector, those who are in the private set-up and not partnership concerns or proprietorship.

Eighty per cent of all MSMEs are partnership firms or propriety concerns, especially the micro industries.

Do they expect all these companies to migrate to private limited companies?

In Coimbatore the textile, pumps and auto auxiliary industries are in very bad shape. We have not yet come out of the demonetisation effect.

You cannot expect micro industries to migrate to private limited companies because of the compliances.

So, it seems the micro industries will never get the 5% tax reduction.

As the MSME sector was the worst affected due to demonetisation, we expected the government to provide us with some stimulus packages, so that this financial year ends positively.

Of course, the 20,000MW of solar power, electrification of 7,000 railway stations through solar power, bio toilets for railway coaches, etc are boosts for small-scale industries.

But this is a long-term measure and there is nothing for the sector to come out of the slump in the next three months.

After the Budget, one Cabinet minister said at least 50% of the companies in the MSME sector have come out of the demonetisation impact...

I don't agree. At least, it is the not the case in Coimbatore; the textile, the pumps and the auto auxiliary industries are in very bad shape.

We have not yet come out of the demonetisation effect.

Yes, the cash flow has improved and people have the money and they are able to manage.

Earlier, we were not able to pay cash to migrant labourers. That has improved now.

Have they started coming back to work?

Not all have come back, but they have started coming back.

The problem is when they come back, it is not necessary that they come back to work in the same place.

Every company must have invested a lot in training them, but when they come back, they may go to a different city or a different company.

So the problem with us is that we have to train new people once again.

You said the cash flow has improved and migrant labourers have started coming back. Does that mean a revival is taking place?

Soon after demonetisation, November was better as we could still use the old currency.

December was very bad.

We expected better times in January.

In Tamil Nadu, we had a lot of holidays in January and then came the Jallikattu issue.

Somehow, January went off without much happening.

So, our hope was the Budget.

We thought it would provide us with some stimulus packages so that the situation would improve.

The finance minister has allotted around Rs 4 lakh crores on infrastructure projects in rural areas and also allocated Rs 48,000 crores for MNERGA.
Will it not be a boost to the economy and indirectly help the MSME sector?

Yes, they are going to give a credit of Rs 10 lakh crore to agriculture with which people will start farming again.

They are going to lay new roads.

They are going to have 20,000 MW of solar power.

All these are going to have a positive impact on the economy in the long run.

The question is when will the farmers start spending money?

Eighty per cent of all MSMEs are partnership firms or propriety concerns, especially the micro industries.
Do they expect all these companies to migrate to private limited companies?

They are going to lay 133 km of road every day in rural areas.

Yes, the connectivity is going to be better.

Yes, by 2018, all the rural areas in India are going to be electrified.

It may take a few months or a few years for all this to have an impact.

Even in Coimbatore, the pump market may go up then.

But our concern is about today. There is nothing in the Budget for the MSME sector to feel positive right now.

So, are you disappointed?

You feel disappointed when something bad happens suddenly.

November 8 was a disappointment.

After that, we have not seen any good things happening till now.

We expected some good things in February so that we would be back in track again in another 2 or 3 months, but it didn't happen.

How long do you think it will take for the MSME sector to start moving again?

I have absolutely no idea.

It all depends on when people start spending again.

Only then the auto sales will go up.

The main thing is people will have to start spending money.

Unless the government does something so that people start spending money, Coimbatore will not start moving again.

All the money is in the bank now.

Only if it comes back into the market, there will be a revival.

We don't see any cash flow as of now. Everything is interconnected.

As far as the MSME sector in Coimbatore is concerned, when the textiles, agriculture and car sales are good, our industry will perform better.

These three are the backbones of the Coimbatore MSME sector.

Are there any positives in the Budget?

It is good for agriculture, infrastructure and the home sector, but not for the MSME sector.

What I am concerned about is my sector and there is nothing in the Budget for us.

We expected amendments in the Small Factories Act.

We expected 180 days as against the current status of 90 days for non-performing assets.

We expected a reduction in the interest rates for loans to 8%.

We expected incentives for capital investment.

We expected a moratorium period on loan repayment for micro and small industries.

But none of this has happened.

Shobha Warrier / Rediff.com