MOT explains MSME benefits

Devendra Kumar Singh, Additional Secretary & Development Commissioner, Ministry of MSME, chaired a webinar by Ministry of Tourism, where he updated stakeholders on policies, benefits and registration under MSME.

Nisha Verma

Owing to COVID-19, Government of India has changed some things in the MSME sector; while some of these changes are meant for the long term, some others are meant for the near future, claimed Devendra Kumar Singh, who said, “We feel that tourism is one sector that has been affected most adversely due to COVID and it has caused the highest level of disruption in business. Thus, there is a need to cope with the situation in the short term, and how we change our businesses is very important. In this context, Ministry of MSME has undertaken a few initiatives, one of which is changing the definition of MSME.”

Singh added that the threshold limit has also been increased. An undertaking with a turnover of up to `5 crore will be considered a micro enterprise; if the turnover is up to `50 crore, it will be considered a small enterprise; and a turnover of up to `250 crore will be considered as a medium enterprise.

Public Procurement Policy

Under the micro and medium categories, the government has a Public Procurement Policy.

“Hence, one is entitled to take benefit of any public sector undertaking (PSU) which is procuring the service. If a PSU is organising a seminar for its stakeholders, the tour operators have a claim to get that order from that PSU under the procurement policy. They also get a difference in the price up to 15 per cent. Hence, if a tour operator is participating in the PSU tender, and if its prices are a little higher, it is still given an opportunity to reduce cost and offer the service. Currently, we do not have any list of mandatory procurement of services like we have in the manufacturing sector, but we are open to suggestions from MOT so that we can include these services in the mandatory list of procurement. Hence, there is a benefit in getting EMD (Earnest Money Deposit) and then tenders are free of cost,” he informed.

Cluster development scheme

“Your strategy could be to align with the present needs and requirements of the people, and for that we have certain schemes,” Singh said as he addressed industry stakeholders.

“If you take a loan from the bank, you can take interest against incremental loans. There will be schemes for cluster development under which if a group of people plans together and they would like to create a common facility for their clients or different users, we will be open to those suggestions. Also, the requirements of the sector are huge and very different. For example, if someone is running a small cottage and for modernisation of your amenities you approach a bank, you are eligible for loan under the priority sector. Hence, the benefit of being an MSME is that you get the priority sector lending from banks, which has been stipulated by RBI. Therefore, that benefit you must avail and demand from the banks that you are eligible,” he added.

It was informed during the presentation that the concept of caravan tourism can be considered under the cluster development scheme. It just needs to be vetted by the Tourism Ministry.

Registration issue

Addressing the issue of registration, Singh informed that Udyam registration is compulsory. “The earlier Udyog Aadhaar Memorandum process has been changed and it is a free-of-cost registration where no documentation is required. We are taking the data from Central Board of Direct Taxes and GST to know your turnover and your investment in the plant. Those who are starting their business for the first time, we understand that they have not filed any income tax returns, which is not a hindrance. We will go by their self-declaration,” he shared, adding that any entrepreneur can register as a service under MSME if they provide any service.

Benefit to tourism stakeholders

Under the Public Procurement Policy it is mandatory to procure 25% from the MSME sector by the Central government ministries and its PSUs. This is not applicable to the state governments. Out of the 25% target, 4% has been exclusively reserved for SCST entrepreneurs and another 3% for women entrepreneurs. From the MSME entrepreneurs, no tender fee is charged and no Earnest Money Deposited, provided that they have got the Udyam registration numbers. Hence, tourism stakeholders can avail these benefits under the services sector classification.

 

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