𝐓𝐡𝐞 𝐥𝐨𝐰𝐞𝐫𝐢𝐧𝐠 𝐨𝐟 𝐭𝐡𝐞 𝐕𝐀𝐓 𝐭𝐡𝐫𝐞𝐬𝐡𝐨𝐥𝐝 𝐟𝐨𝐫 𝐌𝐒𝐌𝐄𝐬 𝐢𝐬 𝐧𝐨𝐧𝐬𝐞𝐧𝐬𝐢𝐜𝐚𝐥!

The VAT registration threshold, now set at Rs 3 million compared to Rs 6 million previously, which will bring many small businesses into the indirect taxation system, will have a negative impact on micro-businesses.

That's not what the MSME (Micro, Small and Medium enterprises) sector needs now . The MSME sector needs a total overhaul !

The declining trend continues. The share of the manufacturing sector in our gross value added at constant prices which stood at some 15% some 15 years back have dropped to 10% lately . As for our MSMEs , whether it is in value added or domestic exports, its contribution have stagnated over the years.

𝑾𝒉𝒆𝒏 𝒕𝒉𝒆 𝒄𝒐𝒖𝒏𝒕𝒓𝒚 𝒊𝒔 𝒊𝒏 𝒈𝒓𝒆𝒂𝒕 𝒏𝒆𝒆𝒅 𝒐𝒇 𝒂 𝒓𝒆𝒕𝒉𝒊𝒏𝒌𝒊𝒏𝒈 𝒐𝒇 𝒊𝒕𝒔 𝒅𝒆𝒗𝒆𝒍𝒐𝒑𝒎𝒆𝒏𝒕 𝒎𝒐𝒅𝒆𝒍, 𝒊𝒕𝒔 𝒈𝒓𝒐𝒘𝒕𝒉 𝒔𝒕𝒓𝒂𝒕𝒆𝒈𝒚 𝒂𝒏𝒅 𝒅𝒐𝒎𝒆𝒔𝒕𝒊𝒄 𝒑𝒓𝒐𝒅𝒖𝒄𝒕𝒊𝒗𝒊𝒕𝒚, 𝒏𝒐𝒘 𝒊𝒔 𝒏𝒐𝒕 𝒕𝒉𝒆 𝒕𝒊𝒎𝒆 𝒕𝒐 𝒃𝒖𝒓𝒅𝒆𝒏 𝒊𝒕𝒔 𝑴𝑺𝑴𝑬 𝒔𝒆𝒄𝒕𝒐𝒓, bringing in the many small businesses into the indirect taxation system by lowering of the VAT registration threshold, now set at Rs 3 million instead of Rs 6 million.

On the contrary, the whole MSME sector needs a beefing up in terms of a more proactive competitive strategy to enable the sector to upgrade itself, become internationally competitive and secure its share of regional and world trade. We should not lose sight of a sector which is the future and the answer to our pressing needs in terms of new higher value added and creative jobs and innovation, 𝙚𝙨𝙥𝙚𝙘𝙞𝙖𝙡𝙡𝙮 𝙩𝙝𝙚 𝙞𝙢𝙥𝙤𝙧𝙩𝙖𝙣𝙘𝙚 𝙤𝙛 𝙘𝙧𝙚𝙖𝙩𝙞𝙣𝙜 𝙖𝙣 𝙚𝙣𝙫𝙞𝙧𝙤𝙣𝙢𝙚𝙣𝙩 𝙖𝙣𝙙 𝙗𝙪𝙞𝙡𝙙𝙞𝙣𝙜 𝙖𝙣 𝙞𝙣𝙛𝙧𝙖𝙨𝙩𝙧𝙪𝙘𝙩𝙪𝙧𝙚 𝙬𝙝𝙞𝙘𝙝 𝙬𝙤𝙪𝙡𝙙 𝙝𝙖𝙫𝙚 𝙖𝙡𝙡𝙤𝙬𝙚𝙙 𝙈𝙎𝙈𝙀𝙨 𝙩𝙤 𝙧𝙞𝙨𝙠 𝙘𝙖𝙥𝙞𝙩𝙖𝙡 𝙖𝙩 𝙧𝙚𝙖𝙨𝙤𝙣𝙖𝙗𝙡𝙚 𝙧𝙖𝙩𝙚𝙨.

We need to see more successes in the sector, more of MSME entrepreneurs joining the league of high quality product exporters.

Before the coming of the “Sanzman” Govt, which is turning out to be an overall deception, if not disaster, the main stakeholders of the MSME sector had come forward with concrete proposals to boost the sector .

Some of the main elements proposed (reproduced in our FB post of 18th October 2024) :

* Made in Moris" Branding Support-Simplified Branding Process

* Technology and Innovation Support

* Taxation and Financial Incentives .

* Financial Facilities with Banks

* Write-Off of COVID-19 Loans for SMEs

* Protection for local manufacturers

* Anti – Dumping

* Subsidized Freight Scheme

* Market Access and Promotion

* Export Promotion Initiatives

* Infrastructure and Utility Support

* Integration with Hospitality Sector and

* Reform of the Competition Commission

Where are we with these ? Is it work in progress ? Some of the main stakeholders seem to have regain their voice. (better late than never)

Ajay Beedassy, président de la SME Chambers : « Ce n'est pas une bonne mesure. Cette mesure touche plusieurs petits magasins et commerces. Les PME engagées dans le textile seront principalement influencées. Il aurait fallu avoir une consultation et voir si certaines entreprises auraient pu être exemptées de cette taxe. Notre compétitivité est réduite. L’impact se fera aussi sentir sur les consommateurs. Les entreprises n'auront d'autres choix que de revoir leurs prix à la hausse.”

And Maya Sewnath, directrice de SSS Furniture: « C'est une mesure qui va affecter les PME, en termes administratifs et financiers. Ce n'est pas encourageant. Le ministre des PME n'écoute plus les PME, tout comme les instances en place. La voix des PME n'est pas entendue. Nous avons rencontré le ministre de tutelle. Il prend note de ce qu'on dit, sans pour autant le prendre en considération. C'est peine perdue que de tenter de le rencontrer par rapport à cette mesure. Le ministre des PME dira que la décision revient au ministère des Finances. »

Most Micro, Small and Medium-sized Enterprises do start small, a fact supported by business data from numerous countries. The majority of private sector businesses worldwide are MSMEs, with a substantial portion of these being micro-businesses, which have no employees besides the owner,micro-enterprises (1-9 employees) to larger small businesses (up to 50 employees).

𝑴𝒂𝒏𝒚 𝒃𝒖𝒔𝒊𝒏𝒆𝒔𝒔𝒆𝒔 𝒂𝒓𝒆 𝒊𝒏𝒊𝒕𝒊𝒂𝒍𝒍𝒚 𝒇𝒐𝒓𝒎𝒆𝒅 𝒃𝒚 𝒂 𝒔𝒊𝒏𝒈𝒍𝒆 𝒑𝒆𝒓𝒔𝒐𝒏 𝒘𝒊𝒕𝒉 𝒗𝒆𝒓𝒚 𝒍𝒊𝒕𝒕𝒍𝒆 𝒄𝒂𝒑𝒊𝒕𝒂𝒍 , 𝒔𝒖𝒄𝒉 𝒂𝒔 𝒂 𝒇𝒓𝒆𝒆𝒍𝒂𝒏𝒄𝒆𝒓, 𝒄𝒐𝒏𝒔𝒖𝒍𝒕𝒂𝒏𝒕, 𝒐𝒓 𝒕𝒓𝒂𝒅𝒆𝒔𝒑𝒆𝒓𝒔𝒐𝒏, 𝒂𝒏𝒅 𝒂𝒓𝒆 𝒏𝒐𝒏-𝒆𝒎𝒑𝒍𝒐𝒚𝒊𝒏𝒈 𝒇𝒊𝒓𝒎𝒔. Starting small reduces financial risk for the entrepreneur. They can test their business idea and refine their model on a small scale before committing more significant resources. This makes the initial "small start" a near-universal experience for MSMEs, even for those that eventually become larger enterprises.

In the present context of lower barriers to entry -due to advancements in technology and digital platforms, the rise of e-commerce and lean startup models reducing capital requirements, and the availability of shared resources like open-source software and the sharing economy- micro and sole-owner enterprises are mushrooming bypassing the traditional high costs for things like marketing, manufacturing, and physical infrastructure, 𝙢𝙖𝙠𝙞𝙣𝙜 𝙞𝙩 𝙚𝙖𝙨𝙞𝙚𝙧 𝙖𝙣𝙙 𝙘𝙝𝙚𝙖𝙥𝙚𝙧 𝙩𝙤 𝙡𝙖𝙪𝙣𝙘𝙝 𝙣𝙚𝙬 𝙘𝙤𝙢𝙥𝙖𝙣𝙞𝙚𝙨 𝙖𝙣𝙙 𝙘𝙤𝙢𝙥𝙚𝙩𝙚.

And here, what are we doing ! 𝑵𝒊𝒃𝒃𝒊𝒏𝒈 𝒕𝒉𝒆𝒔𝒆 𝒏𝒆𝒘 𝒆𝒏𝒕𝒓𝒆𝒑𝒓𝒆𝒏𝒆𝒖𝒓𝒔/ 𝒏𝒆𝒘 𝒗𝒆𝒏𝒕𝒖𝒓𝒆𝒔 𝒊𝒏 𝒕𝒉𝒆 𝒃𝒖𝒅 by our nonsensical lower VAT registration threshold.

Prakash Jankee

This Government is only repeating blunders. MSME are striving for survival and if this trend continues, it may even have a negative effect on social stability. That's my thinking.

Pe met boulets dans lipieds ti entrepreprises. Apres pe attan augmente production.