Even as inflation has soared to a new high, the Union government has not revised the investment limit for the Micro, Small and Medium Enterprises (MSME) for many years.

Entrepreneurs say it has resulted in hindering its necessary expansion and modernisation of its machineries to compete with the competition posed by globalisation.

Micro, Small & Medium Enterprises Development Act, 2006 (MSMED) was introduced to address policy issues affecting MSME units. The enterprises were classified as MSME based on their investment in plant and machinery.

The existing limits under the MSMED Act was fixed in 2006 and since then there has been a significant increase in the price index and cost of inputs. There has also been a drastic change in the business environment/competition within the country and across the world.

The classification of a unit as MSME entitles it to avail certain concessions from the government as well as the banks.

It is not out of place to mention here that the government was aware of the fact that it is the need of the hour to raise the upper limit for investment in MSME from the present Rs 10 crore because there has been a significant increase in price index/inflation since 2006.

Industrialist Kamal Dalmia said a Bill was introduced in Lok Sabha in 2015 to enhance the upper limits of investment for MSME units from Rs 10 crore to Rs 30 crores. The bill also proposed to empower the Central government to make any variation in the Act only by way of an amendment.

Considering steep inflation during the last 10 years and the dynamic market situation, there is a need to periodically revise the criterion of investment. Revising the investment limits for these units by way of notification will facilitate timely action.

He said members of our Association fail to understand why the said Bill is hanging for more than a year waiting for the approval of the Lok Sabha in spite of already having the justification for revision in the possession of the textile/finance ministries.

Non-approval of the said Bill in time is affecting the working of these units either financially or otherwise. Chairman, Focal Point Industrial Welfare Association, Ram Prakash Arora, in a communiqué to MSME Minister Kalraj Mishra, requested the revision of investment limits for Micro, Small and Medium Enterprises (MSME).

It is a fact that the MSME is the backbone of large-scale industries in India. Economic growth, investment and employment opportunities will definitely improve with the revision of MSME limits, he anticipated.

In view of the facts stated above, it is time the government seriously looked into the matter and passed the said Bill, which has been kept pending since April 2015 without any further delay.

The upper limit for investment for the MSME should be increased from the present Rs 10 crore to a minimum of Rs 30 crore to avoid the closure of units, he said.

Source: The Tribune