Ease of doing business: Majority MSMEs benefited but no improvement on cutting business costs, says survey

45 per cent said that the government’s economic and business reform measures have been fruitful for them.

Amid economic gloom impacting growth across sectors including MSME, majority of India’s micro, small and medium entrepreneurs have hailed the ease of doing business reforms being undertaken by the government over the past many months. In a survey comprising 740 MSME respondents across India over ease of doing business, 45 per cent said that the government’s economic and business reform measures have been fruitful for them. “There are two major things in the survey, first is ease of doing business which includes number of regulations that they will be governed by, and second is how easy it is to get permission and most of all how easy is it to get finance,” Rajeev Talwar, President, PHD Chamber of Commerce and Industry told Financial Express Online.

Delayed payment is a big concern as even public sector undertakings very often don’t give them payments on time and even in tenders they are discriminated against (large enterprises) as due to their limited turnover banks don’t lend them or don’t give them guarantee easily, Talwar added during the launch of a report on ease of doing business for MSMEs by the chamber on Saturday.

MSMEs agreed to a significant improvement in areas including number of tax payments in a year, transportation and logistics cost, bringing out a lawsuit against a company, electricity supply, time required to get an electricity connection and to enforce a contract, time taken to transport goods, number of documents in starting a business, online availability of business procedures, starting a business, IT-enabled business procedures, cost to get an electricity and internet connection etc.

Ease of Doing Business for MSMEs so far

Source: PHD Research Bureau, PHDCCI, Survey on Ease of Doing Business for MSMEs, April-June 2019.

However, around 32 per cent MSMEs believed no improvement has occurred and that there is an urgent requirement for the same particularly with respect to improvement in the availability of land and the process to acquire it, the cost involved in purchase of land, starting a business, labour, registering property, and business approvals and clearances. Single window mechanism for approvals and clearances, a common application for business approvals, compliances under various labour laws, procedure for registering a property, electricity tariffs and number of tax returns to be filed in a year etc were other areas where MSMEs claimed no improvement has been made.

Importantly, the survey was conducted in the April to June 2019 period while multiple reform measures were taken by the government in July and August for instance provisions for banks lending to NBFCs for deploying funds to MSMEs up to Rs 20 lakh per borrower under the Priority Sector Classification, pending GST refunds to MSMEs within 30 days, easing angel tax regulation for startups and their investors, extending loan facility to Rs 1 crore under 59 minute loan scheme etc.

The chamber said that states’ role is crucial in improving the business environment at the ground level. “It may be noted that the states which have performed well on the BRAP have observed high growth of GSDP,” the report said adding that in order to improve the ease of doing business in the country, the state governments may identify the issues that exist in their respective states and work towards addressing those bottlenecks. “The government of India and governments of states should be promoting platforms which allow foreign collaborators to come in. This will be a big thing,” said Talwar.


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