Vijay C Roy
Tribune News Service
Chandigarh, January 20
Having hit by the Covid pandemic and slowdown, micro, small and medium enterprises (MSMEs) in the northern region expect tax reforms and incentives in the upcoming Budget across different manufacturing sectors such as textiles and apparels, auto components and hand tools, pharmaceuticals and sports to propel growth.
However, SC Ralhan, president, Ludhiana Hand Tools Association, said as the Centre’s revenue growth was sluggish amid the slowdown, expecting much in the already-tight fiscal space would be foolhardy. Followong are the few expectations:
Reduction in tax
Since a vast majority of the MSMEs are either sole proprietorships or partnerships, the government should reduce tax on the MSMEs.
Focus on value chain
Manufacturing needs to be made competitive by addressing the issues of cost of capital, land, labour and logistics. Instead of merging few small units into a large one, one can explore the possibility of value-chain production. Such manufacturing should be preferred in a close geographical area so that the supply chain is integrated with minimal logistics cost.
Make exports’ income free
To enhance the export growth trajectory, exports’ income should be made tax-free for MSMEs for three years. The income of large enterprises from incremental exports should also be made tax-free. “This will help in partly compensating the additional cost of logistics and other bottlenecks faced by the exporters,” said Sanjay Aggarwal, president, PHD Chamber of Commerce and Industry.
Extend credit guarantee
The credit guarantee scheme for MSMEs should be extended for at least 12 months. This will help them get access to credit from NBFCs without much difficulty.
A large number of cases of exporters are pending for settlement with the Customs and DGFT. The industry is of the view that the government should consider introducing a scheme in line with Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 to resolve all disputes relating to the Customs and the DGFT, says Federation of Indian Export Organisations.
Tax rebate on R&D
Section 35(2AB) of the Income Tax Act may be relooked into so as to provide deduction not only on R&D but also on product development.