The All India Association of Industries (AIAI) in its pre-Budget memorandum to the Finance Minister Pranab Mukherjee has called for a comprehensive package for MSMEs to achieve their growth potential.
AIAI President Vijay Kalantri said that the excise exemption limit needs to be raised from Rs 1.5 crore to Rs 3 crore and investment limit to be raised from Rs 5 crore to Rs 10 crore.
The association has sought from the Planning Commission budget allocation of about Rs 65,000 crore for the MSMEs in the 12th Five Year Plan.
The MSME sector, comprising 26 million units, has been facing major impediments like non-availability of easy credit, poor infrastructure, technology and lack of marketing support, it said.
There is need to increase exemption limit as the small scale industry does not get any Modvat Credit and cost of raw materials have gone up in the last 5 years, Kalantri said.
The investment limit for excise exemption was fixed five years ago and there is no other concession to the small scale sector and in case of interest rate also, they pay more than the PLR.
In fact the MSME sector pays taxes at all levels to the state and central government which is not 'modvatable' nor refunded or adjusted against any other account, Kalantri said.
The MSME sector which has been growing at 11 per cent has potential to grow at 16 per cent, which will not only help the growth of the manufacturing sector but also increase exports and employment, according to the memorandum.