Issues with MSME business

What is the issue?

In India ease of doing business has been not stressed on MSMEs, it needs to be addressed.

What are the issues with MSME?

• It accounts for about a third of GDP and the bulk of employment, but they have less investment boosts and more restrictions.
• It operates in a universe that is mostly outside the formal economy and the ambit of data collection.
• It is most vulnerable to local-level corruption involving the labours and factory inspectors.
• Entrepreneurs in this sector are prone to participate in destabilising systems as an instinctive survival mechanism.
• Activities of MSMEs are captured imperfectly in national statistics it is hard to understand the depths of their crisis.

How government moves are hitting the sector?

• Demonetisation - It was a straight hit, especially for micro-enterprises that operate on a daily cash basis.
• With local markets dislocated for lack of cash, small units abruptly shut shop and sullen jobless youths were seen streaming back to the villages.
• GST-The network connectivity and urged form submissions have hit the sector hard.
• The MSME sector’s sufferings are worsened because the bulk of them are outside the cut-off for this single-market tax.
• MSME exporters are finding themselves saddled with costs owing to an oversight in GST planning.   
• Taxing branded food products is discouraging brand-building at this lowest level of the business value chain.

Source: Business Standard