‘Small Scale Industries are in dire straits due to economic slowdown’

‘Small Scale Industries are in dire straits due to economic slowdown’

November 3, 2019

Mysuru: Karnataka Small Scale Industries Association (KASSIA) has opposed the economic and industrial policies of the Union Government which have badly hit the Micro, Small and Medium Enterprises (MSME) sector.

Addressing a press meet at a private hotel in city yesterday,  KASSIA President R. Raju contended that MSME was mainly dependent on large industries for business.

He said that SMEs are in dire straits and this has been in the making for the last two years. Currently, the severe slow down in the automobile sector, textiles and garments and other manufacturing segments, including , consumer durables has severely damaged the potential of the SMEs to sustain. Added to this, severe flood situation prevailing in Karnataka has affected the MSME sector in the State he regretted. “Micro and Small enterprises have had to go through considerable hardship on account of some of the Government actions including demonetisation and the rather ill planned introduction of GST. The micro and small enterprises in the State have been badly hit by the recession and many units have seen a fall in business ranging from 30 to 70%,” he said.

General Challenges

“We urge the Government to address these issues by provision of incentives for up-skilling, relaxation in GST collection, making it quarterly below certain slabs, reduction of GST rates, improvement in grievances redressal mechanism of GST, improvement in credit flow to the SMEs, reduction of real interest rates, address key issues of the infrastructure deficit both in terms of physical infrastructure and logistics. Investment in infrastructure will also result in increased demand for goods and services, thereby helping overcome the effects of recession,” Raju said. 

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Interest Rate 

Raju said that the rate of interest has been a major issue with the MSMEs seriously impacting their operations negatively. The Karnataka Government, for example, has put in place a mechanism to finance SMEs at 4% interest through KSFC by subsidising the interest rates, he added.

Stating that this has been of great help to SMEs availing finance from KSFC, he  urged the State Government to increase the budget allocation for this. 

“We urge the Central Government to consider a similar measure and advance money at 4% interest to SMEs through the banks by subsidising the interest rates and also provide working capital at lower interest rate,” he urged. 

Interest  Holiday

“We would like the Government to consider extending the benefit of interest holiday for a year in view of the severe recession. This, combined with the introduction of GST, has caused problems to SMEs in terms of cash flow management. We request the Government to extend time for the repayment of interest due by SMEs for at least one year so that industries can continue to exist,” he said. 

Labour Laws 

“In the first place we urge the State/Central Governments to have separate policies for SME sector because operations of large and small industries are entirely different. Small Industries  requires relaxation in matters of labour laws as it is the job creating sector and tends to be labour intensive employing socially backward sections. We would like the Government particularly to address these issues in consultation with industry including the minimum wages issue. Also, labour law compliance, returns, procedures and related issues need to be addressed and redtape eliminated at all levels,” urged Raju.

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KASSIA Vice-President K.B. Arasappa, Joint Secretary Vishwanath Goudar, Managing Panel Chairman N. Satish, Hon.  Secretary M.G. Rajagopal and others were present.


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