Around 50 crore people in India are under-20 years of age and, thus, will be under the working age in the next 20 years, implying a need for the creation of about 10 lakh new jobs each month to provide them gainful employment. However, less than 10% of the workforce at around 5 crore is skilled only. An unskilled labour force implies that expansion of skill-intensive services cannot be the primary job creating solution for India. So, in this regard, manufacturing sector must grow fast with a sizable contribution in the overall economic growth.
For the growth of manufacturing sector, the MSMEs segment should be looked in seriously. MSMEs have immense potential to create millions of new employment opportunities due to labour intensive production processes, however, MSMEs definition in India is limited and far away from global standards. It should be turnover basis; Rs. 1 crore to 25 Crore for Micro enterprises, Rs25 crore to Rs100 Crore for Small enterprises and Rs100 crore to Rs1000 crore for Medium enterprises.
Promote collateral free lending for MSMEs, where appropriate qualitative grading of Promoters and Projects should be available. Promote MSMEs focused NBFCs as they are more nimble footed than banks and a better alternative than unorganised financiers and money lenders.
Boost entrepreneurial growth; entrepreneurship-led economic growth will act as a catalyst not to just boost innovation but also create employment. The innovation fund should be given profound importance and it should be managed by the professionals to create efficiency and efficacy of the enterprises.
The new company law enacted in 2013 treats small, medium and large companies on same footing. The same level of compliance for MSMEs as large companies is going to cause huge burden. It requires several rounds of “overhaul” as several anomalies need to be still addressed.
The inverted duty structure, which is a major deterrent for manufacturing in India, should be completely corrected as domestically-produced goods cost more than imported ones.
The high transaction costs, both in terms of time taken and the money involved, are adversely impacting manufacturing competitiveness and overall business performance, the budget must provide provisions for reducing transaction costs. Radical decisions are needed on the time taken for paper work and permissions.
Enhance the excise limit for MSMEs manufacturing units. The small scale units are enjoying Excise Limit exemption of Rs1.5crore on sale ever since 1998. Since then there has been a drastic change in manufacturing costs, the limit of Rs1.5crore is not at all in consonance with current manufacturing costs and therefore the excise exemption limit for the MSMEs may be factored on the basis of difference between the WPI of 1998 to 2014 and the tax exemption limit may be enhanced appropriately.