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‘Public Sector Enterprises must accept cancellation of orders from MSME with no penalty’

Association says GST-based funding is needed at marginal rates

The All India Council of Association of MSMEs on Wednesday said that Public Sector Enterprises must be urged to accept cancellation of orders from MSMEs with no penalty/black listing as steel price increase is a Force Majeure event outside the control of the MSMEs.

It further added that the Goods and Services Tax (GST)-based funding is needed for all MSMEs at very marginal rates which will encourage MSMEs to purchase raw materials.


 “MSMEs are the backbone of this economy, contributing to 30 per cent of GDP, 48 per cent of exports and creating job opportunities for 12 crore people, which translates to about 40 crore people of India (one-third of our population approximately) who are dependent on these MSMEs,” said the statement.

It must be noted that the steep hike in price of raw materials across all sectors, despite low consumption, and subsequent drop in the production by MSMEs is directly leading to loss of employment, it added.

Reining-in prices

“Government should allow import of all steel materials based on cost and quality requirements at a nil import duty (no anti-dumping) and also ban export of iron ore and steel products. It may be noted that better GDP growth can be realised if value-added products are exported rather than raw materials. This will generate employment too,” added the statement.

It further said that the government has always advocated strongly for development of entrepreneurship. However, if MSMEs get crippled and choked due to spiraling price rise of raw materials, it will only discourage entrepreneurship, ultimately leading to failure of the government's objective of Atmanirbhar Bharat.

“Representations made by all associations on this steep hike has yielded no response from the concerned ministries till date. We therefore urge the Government to take concrete steps to rein-in raw material prices at once and save the MSMEs before they get extinct,” said the statement.