New Delhi, Dec 31 The burden of regulations has risen sharply in India during last decade and has reached to a level where manufacturing struggles to sustain itself.
The pre-budget memorandum released by Federation of Indian Micro and Small & Medium Enterprises (FISME) today highlights a number of areas where reforms were needed to make manufacturing attractive and to achieve the ‘Make in India’ objective.
“Whereas entire Europe saved its SME sector from the additional cost of third party credit rating, India has been among the first countries to burden its MSMEs with mandatory rating under Basal-II”, says FISME President Gandhikumar.
“We have been hiking cost of social security without realizing its consequences on employment of labour force…instead of easing the life of entrepreneur, we have been busy making it more difficult”, he added.
FISME’s pre-budget memorandum has sought greater competition in the market of non-fund based finance and suggested that Insurance companies should be allowed to give guarantees for bid bonds, performance bonds etc.
FISME considers difficulties in accessing non-fund based finance as ‘new entry barrier’ in making use of public procurement scheme which earmarks 20% purchases by central government agencies from MSMEs.
The Working capital limit sanctioned by banks club both the fund based as well as non-fund based limits together. When MSMEs participate in tenders bulk of it could be consumed in bank guarantees, bid / performance binds leaving little funds for actual manufacturing.
The detailed memorandum has suggested steps to popularize Factoring, demanded bringing down investment allowance threshold to zero from twenty five crore, urgent relief in C-form regime, rationalization of customs duties in polymers and fertilizers among others.