In a conversation with TheSmeIndia, Veena Parikh from Gujarat based Shashwat Systems shares her thoughts on why the government’s benefits amidst the Covid-19 pandemic has mostly gone to the medium sized industries and why there’s a need to further distinguish between micro and small industries. She also shares her thoughts on how the manufacturing base and mechanical engineering sector is sort of being left behind amidst the reforms for IT, Electricals and Pharma. Parikh also shares her thoughts on Labour reforms, Aatmanirbhar Bharat Packages & her budget expectations.
Q. How has the Aatmanirbhar Packages announced by the Government of India so far benefited the MSMEs? What challenges do you foresee in implementation of these packages for MSMEs?
Atmanirbhar Packages was a good initiative by the government but it has not benefited the micro and small scale industries. This is because before the announcement of the packages, the government had changed the definition of MSME into SME. Now, even small scale industries are included in micro industries and medium scale industries are included in small. So, practically, the benefit has gone to medium scale industries and not micro and small scale industries. Another aspect of this is that the medium scale enterprises were ready with their paperwork but micro and small scale industries were not as they never expected this change.
Atmanirbhar Bharat has given benefits to pharmaceutical and kutir udyog as they got boosted.
But, again, small scale producers (between Rs. 25 lakh to 5 Cr) remain untouched. Particularly in the engineering sector, very few have got a boost, so in my opinion, micro and small scale should get different defining criteria. There should be a separate governance body that studies their requirements and helps them to get a boost; otherwise, a large number of units are slowly bleeding dry and its adverse effects may not be visible now but their eventual disappearance will be visible in the market in the next decade.
Q. What are some of the key challenges for manufacturing MSMEs in the current business environment?
As we know, a boost in IT and pharmaceutical companies will not go very far, as mechanical engineering is the mother of every sector, without them nobody can survive. It is high time to think about them too, because all other industries are standing on their shoulders. For example, you cannot make medicines on a large scale if you do not have a manufacturing unit and plant manufacturing comes in mechanical engineering. Automation is a part of engineering and for that also we need a structure. We have forgotten that and we are worried about IT, electrical, infrastructure but not mechanical engineering .
Q. How has the business been for your organisation so far? Where is the major demand coming from?
We are Original Equipment Manufacturers (OEMs) at many big companies like Kirloskar, Ingersoll Rand, etc. They have good business in oxygen compressors. But they can’t deliver their products without supply from us , and others like us, so the chain gets broken here and when support is not received by us (who are micro industries). There has been no relief in taxes; In fact, GIDC/electricity have charged us full amount even for the time duration of the period when everything was closed; even bank EMIs and GST charge us high penalties for being late at a time like this.
I believe that if the government cannot give us any other support, it should at least give exemption to us (industries below Rs. 1 crore) from taxes for one year; even that would be enough for the micro and small scale industries to survive.
Q. Migrant issues have been one of the most talked-about issues? Can you expand on the same from your company perspective? Also, what are your thoughts on labour reforms? What more can be done in this space?
In case of migrant issues, the steel, textile and construction industry was more affected because it was a totally unorganised sector and they were scared that they might get trapped during lockdown. But, people working in good companies had trust and never moved; we never had an impact of migrant labourers’ issues in our company.
Labour reforms are again a big debate, as I know that the government has given them proper protection but the issue seems to be that they do not want to get organised and come into mainstream. In our Factories Act, law has not protected employers; that is also another issue because of which they are afraid of labour laws. In my opinion, this can partially be sorted out by a social reform of labours and changing their mind sets.
Q. What are the sops and measures you expect the government to take forward in Budget 2021?
In 2021, we hope to have assistance from a special ministry for micro and small industries. The GST structure should be changed as micro and small scale industries can’t afford 18% and 25% tax. We have always been told how much we have to collect and pay, but in any condition, our product cost goes up for end users; why would they, then, go ahead with buying from small and micro industries?