The industry, including the Micro, Small and Medium Enterprises (MSMEs), has been witnessing several challenges ranging from GST implementation to insufficient credit. Anil Bhardwaj, Secretary General, Federation of Indian Micro, Small and Medium Enterprises, spells out both the highs and lows on the policy front that the industry experienced over the last four years. In an interview with BusinessLine he also shares his Budget expectations. Excerpts:

Do you think the budget/vote-on-account could improve things for the Indian industry?

I would rather keep my expectations low. This Budget is an Interim Budget. Elections are around the corner. Populist announcements are bound to rule the roost. After farmers, unemployed youth and the middle class, may be some goodies will be left for the industry, especially for MSMEs. Fingers crossed.

What are the positive changes that have taken place in terms of policy, infrastructure and ease of carrying out business over the last four years?

While the two most important reforms have been GST and Insolvency and Bankruptcy Code, the government’s focus on importance of manufacturing through ‘Ease of Doing Business’ and ‘Make in India’ has been relentless. The progress on building highways also has been remarkable. I feel global slowdown and demonetisation seem to have spoiled the party to a great extent otherwise the picture would have been much more pleasing.

Are there things that have worsened for the industry in the same period?

Demonetisation and GST, as somebody has described, have created a liquidity gridlock type situation where several payments are delayed. Because of this, the Damocles’ sword of being classified as NPA-SMA (non performing and special mention assets), was and is still hanging over the heads of large number of MSMEs. Many MSMEs got into trouble as they were suppliers to large corporates that went to corporate insolvency resolution process under the Insolvency and Bankruptcy Code. MSME dues are classified under ‘operational creditors’ and not under ‘financial creditors’ with little or no chance of recovery.

Do you think the recent sops announced for the MSME sector could bring long-term benefits for the sector?

Though not all the 12 initiatives for MSMEs outlined by the PM recently may have long-term importance, some do. The MSME sector perennially suffers from delay in realising payments. One of the market-based solutions has been the concept of Trade Receivable e-discounting system (TReDS) which was not taking off because of reluctance of corporate buyers to come on board. The PM announced that all companies with a turnover of more than ₹500 crore will have to join TReDS platform. That could be a game changer. Also, he announced an increase of mandatory procurement for Central buying agencies from 20 per cent to 25 per cent.

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