Union Budget 2012-13: A mixed bag for
MSMEs
‘Extending MAT Coverage on Proprietorship & Partnership firms to
adversely affect 97% of MSMEs’
The Micro, Small and Medium Enterprise sector has termed the
Budget 2012-13 as a mixed bag. While raising the turnover limit for compulsory audit
from Rs. 60 lac to one crore has been widely welcomed, the extension of Minimum
Alternative Tax (MAT ) on proprietorship and partnerships firms is being termed as troublesome.
“With 97% of MSME
being proprietorship and partnership firms, extension of MAT on MSMEs will make
capital formation and subsequent raising of funds even more difficult for them”
according to V.K. Agarwal, President of Federation of Indian Micro and Small
& Medium Enterprises (FISME).
‘The Finance Minister stopped at highlighting the importance
of manufacturing and taking but only a few ad-hoc measures to demonstrate his
willingness in following-through the promise.
The Budget just made passing remarks on the GST, National Manufacturing
Zones, SME Exchange, 20% mandatory procurement from MSEs in public
procurement etc. According to FISME, he
needed to take a strategic view by having a investment friendly import duty
structure, especially after prolonged and substantive discussions in Planning Commission with stake holders on
impulsing manufacturing’, President FISME
said.
On the access to equity funds by MSMEs, FISME welcomed exempting
capital gains tax on sale of a residential property if the sale consideration
is used for subscription in equity of a manufacturing SME company for purchase
of new plant and machinery and creation of Rs. 5000 crore fund for equity
support . The decision to extend the
weighted deduction of 200 per cent for R&D expenditure in an in-house
facility beyond March 31, 2012 for a further period of five years was well
received too.
FISME also welcomed higher duty protection given to cycle
and cycle parts manufacturers reeling under onslaught of cheap imports and
noted that many labour intensive sectors need support through strategic use of
import duties and NTBs. Similarly,
reduction in duties for inputs of industries such as Paper, Medical devices etc.
would also prove beneficial.
FISME particularly lauded the decision to use technological
platform for disbursement of subsidies as large scale leakage has been reported
in their delivery process.
