Mixed reaction from MSME sector on Budget 2010

Top Stories

»	49% Indian startups now from tier 2, 3 cities: Jitendra Singh
»	'India ranks 3rd in global startup ecosystem & number of unicorns'
»	Tripura exported over 9K tonnes of pineapples in 2 years
»	CPI inflation eases to 6.71% in July, IIP falls to 12.3%
»	Rupee depreciates 12 paise to close at 79.64 against US dollar

Saurabh Gupta | 27 Feb, 2010
The General Budget 2010-11 evoked mixed reaction from the Micro, Small and Medium Enterprises (MSME) of the country, finds SME Times on the budget day.

Calling the budget healthy and forward looking for the MSME sector, Bikky Khosla, CEO of Infocom Network Limited told SME Times, "This budget has marked the long term challenges of ours (SMEs). One, by retaining the service tax at 10 percent; two by giving relief on central excise duties for MSMEs; third by increasing budget allocation for MSMEs; and fourth is by extending the interest subvention of 2 percent for one more year for small and medium enterprises (SMEs)."

However Khosla was disappointed from the budget for not taking the recommendations of MSME Task Force. He said, "It was little a bit disappointing that the government didn't take the recommendations of the task force, which we have recommended, but I am quite hopeful that soon that will be implemented also."

In the Union Budget 2010-11 presented in the Lok Sabha on Friday, Finance Minister Pranab Mukherjee has proposed to extend the interest subvention of 2 percent for one more year for exports covering handicrafts, carpets, handlooms and SMEs. Earlier, the government had provided interest subvention of 2 percent in pre-shipment export credit up to March 31, 2010 in certain sectors.

The Finance Minister stated that to resolve a number of issues affecting the growth of the Micro, Small and Medium Enterprises Sector, the Prime Minister constituted a High-Level Task Force which held detailed discussions with all stake holders and drew up an agenda for action.

A High Level Council on Micro and Small Enterprises will monitor the implementation of the recommendations and the agenda for action. The allocation for this sector is being increased from Rs.1,794 crore to Rs. 2,400 crore for the year 2010-11.

FM limits for turnover above which accounts need to be audited has been enhanced to Rs. 60 lakh (from the present Rs. 40 lakh) for businesses and to Rs. 15 lakh (from the present Rs. 10 lakh) for profession. Limit of turnover for the purpose of presumptive taxation of small business has been enhanced to Rs. 60 lakh.

To facilitate the conversion of small companies into Limited Liability Partnership, transfer of assets as a result of such conversion will not be subject to capital gains.

While presenting the Union Budget 2010-11, FM announced that the corpus for the Micro-Finance Development and Equity Fund is being doubled to Rs. 400 crore in 2010-11.

While commenting on the budget for SME sector, Group Chairman of Assam Co. Ltd., Krishna K. Jajodia told SME Times, "I would say a very good attempt has been made, but this is not at all sufficient. The role of small and medium enterprises (SMEs) has now to be recognized at large number of major industrial units. The government requires the directed study in terms of providing and facilitating and assisting the growth. The government needs to maximize the focus on small and medium enterprises."

"I would say SMEs were expecting more from this budget to come out from the economic slowdown. Although the Finance minister recognizes the issues of SMEs, but we need more," he added.

Meanwhile MD & Group Chairman of Pahwa Enterprises, Deepak Pahwa said, "Overall, it seems to be a positive budget , though one will have to study in depth to realise the actual impacts."

"The reduction in Personal Income tax will give some relief to a large group of salaried people. As a corporate, the reduction in surcharge for Corporate Tax from 10% to 7.5% is welcome. The increase in MAT to 18% will discourage investment," he added.