COSIA Meets the Union MSME Minister

A man of action

Mr. Nitin Gadkari is currently the Minister for Road Transport & Highways of India and Shipping Ministry& MSME Minister. He built an early reputation as a man of action with the construction of 55 flyovers in Mumbai, and cemented it with the Mumbai-Pune Expressway, which magically cut short the time, torture and dangers of the old Bombay-Pune Road.

India now knows him as the man who has turned around the transport infrastructure, with his relentless dynamism, innovative approach and out-of-the-box thinking. Pushing up the construction rate of highways from 12 kms per day in 2014-15 to 27 kms a day by 2017-18, he is a man who has projects, facts and figures at his finger-tips,plus the kind of enthusiasm which is very infectious.

MSMEs get a doer in Delhi

So, when Nitin Gadkari took charge as MSME Minister in June 2019, most MSMEs knew that action and changes would inevitably follow.  “The most important work to be done is boosting economic development of the country by employment generation and the MSME is a core ministry which can create jobs in rural, semi-urban and urban areas of the country,” Gadkari said after assuming charge.

He has also laid great emphasis on import substitution.

As an apex Association, COSIA, has tenaciously pushed for MSME-friendly policies from successive Governments which have often paid lip-service to their contributions to exports, employment and manufacturing GDP, but failed to deliver simple, needed infrastructure &a hassle-free environment.

COSIA invited to meet Mr. Nitin Gadkari

It was, therefore, a real pleasure to get an invitation from the Ministry of MSME to meet the Hon’ble Minister. Our Vice-President, Purushottam Agwan flew down to Delhi on 6th December, 2019 for a one-on-one meeting. It was a friendly but very business-like meeting with the Minister where many of the issues long plaguing us as an Association, as well as, MSMEs as a whole were discussed in detail.

Issues and suggestions:

 1) BMO Accreditation and Representation on the National MSME Board: 

COSIA was the First National Level Industry Association to have received BMO Accreditation from NABET. It was told that Accredited BMOs would be given preference for representing MSME issues at various fora.

However, despite being a Member of the National MSME Board in 2011-12 and part of the PM Task Force in 2010-11, COSIA was not invited to join the Board thereafter. Knowing the grassroots level at which COSIA operates and its ethical and objective stand on many issues, the Hon’ble Minister promised to look into the issue of representation on the Board.

2) Dangers of the proposed MSME Definition by Turnover 

The Cabinet committee has passed the amendment to revise the definition of MSME using thresholds of GST Turnover of 5 Cr / 75 Cr / 250 Cr for classifying Micro Small and Medium Enterprises respectively.

These thresholds are too high. The Government’s objective is to encourage genuine MSMEs because they can generate high employment per unit of investment. Without such a linkage the whole exercise would be self-defeating.

For example, an enterprise with Rs.100 crores turnover obviously does not need hand-holding or subsidies to survive. Instead the initiative could end up being abused. Large multinationals could gain backdoor entry as MSMEs by taking Udyog Aadhar registration under the guise of manufacturers, simply by assembling a few nuts & bolts, even as they merely traded in high-value machines. 

In the circumstances, COSIA suggested that the thresholds be revised downwards with minimum employment riders,after wider consultations, to say – 5 Cr / 20 Employees, 25 Cr / 60 Employees and 75 Cr / 150 Employees. The Minister seemed convinced about the possibility of misuse and promised to take up the suggestion for review.

3) Delayed Payment Penal Provisions – Plugging the loopholes:       

It was brought to the notice of the Hon’ble Minister that Facilitation Councils are finding themselves toothless and ineffective because large corporates are taking the matters to High courts and endlessly delaying resolution of payment issues.

COSIA has requested the Ministry to ensure strict implementation of the requirement to deposit 75% of the claim with the court before the hearing of any delayed payment case. In addition, we also asked for a clear provision to disallow the expense, ifthe delay is beyond 90 days.The Ministry has promised a prompt review of the issues raised and take action as necessary.

4) Earn and Learn Apprentices:

This is an issue close to COSIA’s heart.  COSIA pointed out that out of 12 crore hands employed by 4.5 crore MSMEs, about 6-8 crores are in the 18-25 years age and are unemployable for want of any skill and education.

These youth are not sure of the trade they want to take up.It’s only after a year`s exposure that they understand industry and can visualize the possible trade they would like to make their career in. During this period, they want the full wages in hand without any PF or ESIS deductions.

Given this situation most prefer to work as unorganized labour without any records and protection. To bring them into the main stream and help them acquire formal skills of their choice, COSIA suggested the following process –

a. The Non-SSC /unskilled youth between 17 to 22 Years age, get registered for Industrial Internship, with Aadhar based Unique Labour ID with the State Government.

b. MSMEs would engage them for Industrial Orientation forone year as Interns with a stipend of 70 % of the Minimum Wages and Accident Insurance Cover. Experiencing the industry from within, they can then choose what they like.

c. The Interns, should, thereafter attend 3 Months of Training, inthe Trade of their choice at some Government / Private recognized ITI. Government to pay lump-sum fees of Rs 7500 per student to ITIfor 3 months.

d. MSMEs volunteerfor the Internship Program and register as employer for such Interns. They can form a cluster under the Industry Association (Business Membership Organisations)

e. After this, under our suggested ApprenticeshipProgram, studentshave to work for 5 days a weekat a stipend of 80% / 90 % and 100% of Minimum Wages for the 1st, 2nd & 3rd year respectively and Accident insurance (whereas as an ITI student, they will neither get enough hands-on experience and will also have to pay fees for the 3 years course)

f. To ensure the imparting of Trade related theoretical Inputs for such Apprentices, a mechanism has to be evolved whereby, during the 6th day and Holiday, volunteering BMO and the ITI organise it with the Government bearing the fees for this training.

g. After 3 years of Apprenticeship, the students will appear for NCTV Examlike any ITI student and get a formal ITI Diploma. After which there is no binding on MSME to formally engage students for a permanent job.

h. Advantage – About 6 to 8 crores youth will be gainfully employed, even as they learn. EVERYONE WINS– The Intern/Apprentice – The MSME and the Government whose modest financial outlay will lead to guaranteed training & employment.

Hon’ble minister found merit in the suggestion and promised to put it up before the appropriate forum for consideration on our behalf.

New Solar Installation will halt:

It is reliably learnt that a new regulation by MERC is planning to replace the present Unit for Unit Barter system of Billing by export of Units of Solar Installations @ just Rs 3/per unit, instead of the present exchange taking place at about Rs. 10/11.

The loss of Rs.8 per unit translates into about Rs 24000 per month for a 25 KW plant producing 3000 units pm. Such a move will bring new solar Installations to a grinding halt and make old installations non-viable. It will not only be tantamount to a breach of contract for MSEDCL but will also seriously jeopardize the Government’s ambitious target of reaching 100 GW Solar Power by 2022.

The Hon’ble Minister agreed with our view and promised to intervene to make necessary amends.

5) VenDEx -Exhibition: 

COSIA after successfully conducting 3 editions of VenDEx applied for MSME Ministry’s support for the 4th Edition of VenDEx – B2B Exhibition for MSMEs and PSUs under National Vendor Development Program. However, no communication is received from the Ministry despite expiry of proposed dates.

The Minister promised that he will look into the matter and his office will communicate shortly.

Attachments

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