Prime Minister Narendra Modi’s Atma Nirbhar Bharat Abhiyan, a game-changer scheme for the MSME sector, which contributes 29% to the GDP of the country. According to MSME ministry’s annual report, India has 633 million MSMEs and of these, 630 million that is 99.4% are micro-enterprises while 0.52 % (3.31 lakh) are small and 0.007% (5,000) are medium enterprises. It is the second largest employment generating sector after agriculture. It provides employment to around 110 million.
Out of MSMEs total GDP, it is estimated that close to 6% of the GDP from manufacturing and the rest 23% is from the services sector. About 90% of the service sector units registered under this are in the business of construction and works contract. According to the new definition of MSME in the light of Atma Nirbhar Abhiyan, the service industry will get a boost. As per the revised criteria, a unit with Rs 50 crore of investment and Rs 250 crore of turnover will fall under the ‘medium’ enterprise category. Also, a new composite formula of classification for manufacturing and services units has been notified. Now, there will be no difference between the manufacturing and service sectors.
MSME-registered service industries, in specific works contracts are the second largest employers in India. As per the section, 11 of the MSME Development Act 2006, the procurement preference policy is mentioned as “for facilitating promotion and development of micro and small enterprises, the Central Government or the State Government may, by order notify from time to time, preference policies in respect of procurement of goods and services, produced and provided by micro and small enterprises, by its Ministries or departments, as the case may be, or its aided institutions and public sector enterprises.”
National Small Industries Corporation (NSIC) under the ministry of MSME work with the motto of ‘Facilitating the Growth of Small Enterprises’ also provided that the registration is on chargeable basis assuring the waiver of EMD, and price preference to the registered units. Udyog aadhar by ministry also offers the same but there is a nominal fee. But unfortunately no state government PWD and most of the PSU do not provide the facility of EMD waiver and price preference of 15% for the works contracts, companies registered under even both the organisation. This intact dilutes the broad vision of MSME in the Atma Nirbhar Abhiyan.
Even as the revolutionary step by the Ministry of Road Transport (MoRTH) avoid EMD for the works contract under the ministry irrespective of the value for the eligible contractors. Unfortunately MSME registered units do not avail such facility in smaller works due to wrong interpretation of service and manufacturing. In any works contracts usually estimated as 30% is labour and 40% is material and the rest are administrative expenses, overheads and profit.
The service industry, works contract registered under MSME is an integral part of Atma Nirbhar Bharat Abhiyan, hence we can expect the ministry will take necessary steps on this International MSME Day for the benefit of the sector through a government order to include the works contractors also to earn the benefit of MSME registration and MSME development act.
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