“The NMP provides for adequate support to promote and strengthen employment-intensive industries to ensure job creation. Special attention will be given in respect of textiles, leather and footwear, gems and jewellery, and food processing industries,” the Confederation of Indian Industry (CII) said in a statement. CII said that one of the major challenges faced by SMEs is inadequate access to adequate and timely finance, mainly due to lack of financial information and non-formal business practices, as they are largely dependent on promoter’s resources and loans from financial institutions.
According to the industry lobby, the capital markets are difficult to access, due to high costs, difficulties in complying with regulatory requirements, limited access to bank finances, inability of SMEs to create tangible assets, as also because of the debt-equity ratio norms followed by banks. Ramesh Datla, chairman of CII National MSME Council and managing director, Elico Ltd, said that measures such as the rollover relief from long term capital gains tax to individuals on sale of a residential property in case of re-investment in a new start-up MSME unit in the manufacturing sector will be a huge encouragement.
It will enable a large number of entrepreneurs to raise equity by selling of ancestral properties and to raise the level of investments in the MSMEs in the manufacturing sector, apart from boosting employment.
Datla also said that specific measures highlighted in the NMP, such as the setting up of a stock exchange for SMEs and implementation of Security and Exchange Board of India’s framework for recognition and supervision of platforms of stock exchanges for SMEs, the tax pass-through status for venture capital funds will focus on SMEs in the manufacturing sector.
It is estimated that in terms of value, the small sector accounts for about 45 per cent of the manufacturing output and 40 per cent of the total exports of the country and employ about 59 million people in over 26 million units. There are over 6,000 products, ranging from traditional to high-tech items, which are being manufactured by the MSMEs in India.