DRAFT MSME POLICY & TEXTILES POLICY, 2013 – MCCI Memorandum

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mcciThe Chamber has submitted its specific suggestions to the State government on the Two Policy drafts on MSME and Textiles. It has welcomed West Bengal’s focus on a rapid and inclusive growth of MSME sector, which is the diving force of the economy in terms of employment, production and exports. It has also highly appreciated the adoption of a separate Textiles Policy, so crucial to revive, modernise and broad base this industry and attract large-scale investments and global players.

MSME Policy :

 

Thrust Areas:

The Draft Policy does not indicate the thrust areas with high growth potential for priority development such as Coir Industry. Suggested that such industries should be specified and incentive packages should be provided for them.

Service Sector :

It has a strong potential for faster growth. Even at the time of global slowdown, it recorded a growth of 9.5 p.c. in 2012-13. Suggested that special provision should be made for Service sector enterprises in the MSME sector.

Classification of Areas :

Extensive areas of Howrah and 24 Parganas are under-developed and hence they need adequate incentives to come up. It has been suggested that for Howrah, only KMDA areas may be included in Zone A and remaining areas of Howrah district should come under Zone B. Similarly, only industrial areas/urban areas of 24 parganas (North & South) may be included under Zone A.

 

Capital Investment Subsidy :

The Chamber has welcomed the provision of additional 20 p.c. subsidy on Capital Investment in enterprises wholly owned by Women, SC/ST and Minority communities. But it is not clear whether in such cases, the ceiling limits for micro, small and medium units shall be applicable or not. The Policy statement needs clarification on this point.

 

Waiver of Electricity Duty :

The Chamber has pointed out that only a few years back Electricity duty was doubled from 7.5 p.c. to 15 p.c. hence, the percentage of duty waiver should not be reduced in 2013 Policy from the earlier years and kept at 75 p.c. in Zone A and 100 p.c. in Zone B, C & D for a period of 5 years.

 

Stamp Duty & Registration Fees :

The enterprises in West Bengal are already over burdened with higher valuation of property made arbitrarily by the Registrar of Assurance, from time to time. Hence, suggested that earlier rates of 75% for Micro units and 50% for others should be retained.

 

Entry Tax Reimbursement :

The Chamber has welcomed the provision to reimburse Entry Tax on Plant & machinery and also on raw materials, after commencement of commercial production. Suggested that Entry Tax may be reimbursed for five years in place of three years, to provide genuine relief to the enterprises, as they do not get the full benefit of production in the initial two years.

 

Reimbursement of VAT :

It is a welcome provision. But the  limit of 50 lakhs during the first year of production will not really help the units,  as no plant can be run to full capacity in the first year. Hence, suggested that the limit of 50 lakhs should be available during the initial three years and additional 25 lakhs may be allowed in the following two years. The total time limit should be five years, not three.

 

Workforce Assistance :

Suggested that to provide genuine relief to SMEs, reimbursement of ESI and PF should be allowed for ten years for B, C & D Zones

Textiles Policy

Current Backdrop :

The Chamber has pointed out that Bangladesh, the top exporter of Textiles to the European countries,  exported in 2012-13 to a single European MNC, $1.2 billion worth of Textiles as against $ 600 million by China and  $ 400 million by India. Bangladesh which has the same climatic condition as in West Bengal, has no raw materials for spinning yarn. But now Bangladesh is facing political problems which are driving away the textile industry to Vietnam, Cambodia and other neighbouring countries. West Bengal may capitalise this situation and attract investors to invest here, provided a suitable Textiles policy is put in place.

 Enabling Business Environment :

The Draft Policy correctly focuses on providing a better and more conducive business environment for the textile sector. The Chamber has suggested that focus areas should also include Weaving, Fabric and/ or Garment Processing / Finishing / Dyeing / Printing also, as a large number of units in West Bengal are engaged in these areas and providing substantial employment.

Capital Investment Subsidy :

The CIS covers only Micro, Small and Medium enterprises, but large-scale units have been overlooked. It is suggested that since Spinning mills can be set up only in large scale sector, the Policy should provide for  Large units also and specify benefits for them.

Interest Subsidy :

Suggested that this incentive should be available in addition to the benefits under TUF Scheme of the Central Government and the 5 year period should begin from the date of operation of the units. As such, effective period should be 2+5 years. Moreover, Interest subsidy should be available for the whole of West Bengal and not in  Zones C and  D only.

                    

Power Subsidy :

The Chamber has suggested a more practical, viable and less expensive measure than the proposed one for the State. Suggested that all textile units with power consumption of more than 1 MW should be allowed to purchase power freely from National Power Exchanges. WBSEB, CESC or any Central/State/Private power distribution Company should not be allowed to obstruct this free purchase of power from the Exchange. Further, for all export-oriented units in the SME sector consuming power up to 1 MW, a subsidy of Rs 3 per unit should be given for 10 years throughout West Bengal. In case of consumption over 1 MW, free power purchase through Exchange should be permitted, permanently.

Entry Tax :

The Chamber has suggested that for reimbursement of Entry Tax, besides Plant and Machinery, building and construction materials also should be included. Besides, the consumption should be taken on actual basis without any cap/limit.

Water Conservation/Environment Compliance :

The proposed assistance up to 50 p.c. or 2 Lac being too small it will not be of any practical help, hence the provision may be deleted.

   Common Effluent Treatment Plant (CETP) :

The Chamber has pointed out that nowhere CETP by the private sector has been feasible or practical. It has suggested that the practical course for the Government will be to set up complete and comprehensive CETP and levy reasonable charges on the individual enterprises.

Freight Subsidy :

                           The proposed 50 p.c. freight subsidy for units located in Zone D for export purpose only, is too small for practical purposes, hence this provision may be deleted.

 

  Research and Development :

The Chamber has suggested that instead of setting up a separate R&D Centre, the existing R & D at GovernmentCollege of Engineering & Textile Technology, Serampore may be developed as an ideal Center of Excellence for Textile industry This will save lot of investment needed for a new Center of Excellence.

 

 Land for Textile Parks :

The Chamber has suggested that the Policy statement should clearly provide that factory buildings for textile units shall be multi-storied buildings. The State Government may work out with the architects the design of such buildings and provide attractive capital subsidy for multi-storied factories and buildings with maximum Floor Space Area (FSA). Further, the policy should clearly mention that women workers will be allowed to work in Textile industry for 24 hours (already allowed in Tamilnadu) as already allowed in the IT sector of the State, provided adequate accommodation, company transport, safety and security are assured by the industry.