Union Minister for Micro, Small and Medium Enterprises (MSME) Nitin Gadkari told the Rajya Sabha on Thursday that the government would come out with a new definition of MSMEs, which are currently defined on the basis of investment in plant and machinery, by the end of the ongoing session.
Concluding the discussion on the working of his Ministry that started on Wednesday, Mr. Gadkari said the government was working on the new definition.
Congress member Jairam Ramesh had suggested that MSME units should be defined on the basis of turnover as it would increase compatibility with the Goods and Services Tax (GST) system.
Responding to concerns raised by several MPs, Mr. Gadkari admitted that “there are problems” but asserted that the government was trying to convert those hurdles into opportunities. It had accepted 39 suggestions by the U.K. Sinha committee appointed by the Reserve Bank of India, including the setting up a “fund of funds” for the sector. The MSME sector currently contributed 24% of the GDP growth and 48% of exports, with an annual turnover of Rs. 1 lakh crore this year. A target of Rs.5 lakh crore in five years had been set, he said.
Among the hurdles before the sector was the pending payments by governments and public sector undertakings, which Mr. Gadkari estimated were Rs.5.5 lakh crore to Rs.6 lakh crore. These dues needed to be cleared in order to boost the sector.
He said he had made recommendations to help the sector in view of the ongoing coronavirus pandemic and that Finance Minister Nirmala Sitharaman had called a meeting to discuss the same on Friday. On the impact of demonetisation in 2016 and introduction of the GST in 2017, which several MPs said had hit the MSME sector, Mr. Gadkari said there had been a temporary impact that was no longer the case.
To boost products from rural India, Mr. Gadkari said the government had decided to set up an “Alibaba or Amazon-type” portal for Khadi Gramodyog.
