The Coimbatore District Small Industries Association (CODISSIA) has appealed to the Union government to relax some of the mandates under GST, Income Tax, and bank loans for Micro, Small and Medium-scale Enterprises (MSMEs) to spur growth.
Association president M. Karthikeyan said in a memorandum submitted to Union Finance Minister Nirmala Sitharaman that pre-closure charges should not be levied to MSMEs when these units go for pre-closure of bank loans. The Reserve Bank of India should make this a norm for all banks. Since banks are reluctant to provide loans under the Credit Guarantee Fund Trust for Micro and Small Enterprises scheme, a district-level monitoring committee should be constituted under the chairmanship of the Collector and its members should include the head of the District Industries Centre, district lead bank and MSME Association heads to monitor implementation of the scheme.
Banks should also accept agricultural lands as collateral security for MSME loans.
Working capital loans are sanctioned on the basis of 20% of a company’s annual turnover. Under the GST regime, the costs of raw materials have shot up and hence, the working capital sanction limit should be increased to 40%. For the working capital limits like open cash credit, the margin requirement should be reduced from 25% to 10%.
Mr. Karthikeyan said the processing charges for micro industries that avail of loans should be nil and for small industries it should be 0.5% of the loan amount. The association also sought Income Tax exemption for investments in solar power plants.
Also, since job work amounting to manufacture was exempted from Service Tax in the previous tax regime, the government should continue the same policy and provide exemption for the services by job workers, the CODISSIA said.
