Southern MSME JAC seeks better deal for the sector

Hyderabad: The Joint Action Committee (JAC) of MSME associations in South India urged the central government to immediately address the issues concerning micro, small and medium enterprises (MSMEs) in South India.

South India MSME JAC meet in Bengaluru recently and decided to approach the central government and Members of Parliament with MSME sectors' problem. Nine MSME associations from across South India attended the meeting.

The central government can look at some basic measures to prevent small and medium industry units from becoming non-performing assets (NPAs), said APK Reddy, vice chairman, South India MSME JAC, and national president, Federation of Small and Medium Enterprises of India (FSME India),

"To begin with, all potential NPAs could be brought before the DIPC (District industries Promotion Council)/ DIC (District Industries Centre) and here the council must have the participation of the lead district manager representing the banks.

The first deliberations of the concerned unit should be held there and must arrive at a conclusion whether the unit is a willful defaulter or not. If it is not, then the unit must be referred to SLllC sub-committee for further action tor revival / rehabilitation.

Only if the unit is proved to be a willful defaulter, the banks may proceed to take measures," he explained.

NPA norms for MSME sector may be modified in such a way the units get longer breathing time to repay the principal installments to enable them to focus more on their business instead of running around money lenders to borrow money at higher rate of interest, he added.

"We, therefore, urge that the NPA threshold be suitably relaxed for SMEs to 180 days keeping in view the working of this particular sector," he said.

Airing his views on other aspects of MSME sector, Reddy said that, though MSMEs contribute 40 per cent to the country's exports, they do not get adequate incentives as in the case of units in SEZ are EOUs.

In order to encourage SMEs to export more and also help generate employment, there is need to look at this with a view to providing more focused incentives to the SME entrepreneurs".

According to him, the central government must extend the 25 per cent corporate tax slab benefit given to corporate SMEs to the other categories of SMEs also such as partnership, proprietorships etc., as most SMEs are not incorporated and thereby are left uncovered.