Existing MSME Units On The Verge Of Closure Due To Dilution Of Fiscal Incentives In Post UT Regime-FOIJ

Jammu, 27-09-2023: An Urgent Meeting of the Federation of Industries Jammu was held under the Chairmanship of Sh. T.S. Reen in the presence of Sh. Lalit Mahajan and Sh. Deepak Dhawan, Co-Chairmen, and other Executive Committee Members of FOIJ to discuss the uncertainty that prevails in the mind of Existing working units due to the dilution of Fiscal Incentives in the post-GST Regime resulting in the future of around 6000 Existing Units Working in Jammu Province with the Investment of approx.6500 Crores and providing Jobs to approx. 1.50 Lacs Direct & Indirect Employment to Local People of JKUT.

During the course of discussions, Members present in the meeting raised serious concerns about the Dilution of 50% in the Budgetary allocation for Existing Units in post-GST Regime for Existing Industry in comparison to Fiscal Incentives available before the Implementation of GST Act w.e.f. 08-07-2017 in Jammu & Kashmir State as per the data available with Federation of Industries Jammu:-

In respect of the Turnover Incentive, Industries Department of JK UT has notified the Turnover Incentive as handholding support to the Existing Units working as on 31-3-2021 with the initial Budget of Rs.50 Crores p.a. with the assurance that the Budget Allocation shall be increased on the basis of Claims received in each Financial Year, against which the Claims has been received for the Financial Year 2021-22 from Existing Units amounting to Rs.206 Crores but the State Industries Department has declined to enhance the Budget to meet the additional requirement of Rs.156 Crores resulting great resentment amongst the working Micro, Small and Medium Enterprises.

 While discussing the issue of Non-Applicability of GST Linked Incentives for the Existing Units  Under Substantial after 01-04-2021 in the Notifications of Govt. of India under NCSS-2021 and JK UT Package of Incentives w.e.f 01-04-2021 on the Substantial Expansion/ Additional Items/Change in the line of Activity,  we wish to draw the kind attention of Hon’ble  Lt. Governor that in all the previous Notification of Govt. of India and State Govt. the Fiscal Incentives always granted at par to Existing Units under Substantial Expension with the Additional Items/Change in the Line of Activity but due to denial of  GST Linked Incentives on the Substantial Expansion to Existing Units in the Present Central /State Govt. Notifications, we fear that in future the such units may close down their units due to uncertainty prevails which may be resulting into the mass-scale retracement of Industrial Workers.

 With respect to Market Support to MSME Units in State Govt. Purchases, We wish to submit that the majority of Existing Local Micro/Small units have been established to cater the requirements of the various Govt. Departments/Agencies. All these local units have been supplying their products adhering to the prescribed standards duly certified to the entire satisfaction of their procuring consumers and a majority of these units are exclusively dependent upon these procuring Department for their very existence/ survival due to Locational disadvantages as we are sitting at the far end of the Country with very limited Market of our Products other than the Govt. Departments.

But After 5^th August 2019, it has been made Mandatory for the State Govt. Departments purchase goods through the GeM Portal, resulting in the serious threat of closure being faced by the Local MEME Units supplying the Goods to the State Govt. Departments as the price and Purchase preference has been withdrawn which was applicable to the MSME sector previously resulting in a drastic decline in the sale graph of local MSME Units that supply the Goods to State Govt. Departments and also through SICOP for the Items reserved for the SSI Sector. It is worthwhile to mention here that Govt. of Rajasthan and Punjab provide Marketing Support to Local Manufacturers by giving Purchase Preference.

While deliberating on the issues Sh. T.S. Reen informed the Members that the matter has already been taken with the Hon’ble Lt. Governor and Commissioner Secretary Industries & Commerce Department to resolve the issues on priority and awaiting their response on the matter.

It was further resolved in the meeting that it is the need of the hours for the UT Govt. to resolve the issues on a priority basis to save the local MSME Units from closer otherwise we have no option but to retrench the Industrial Workers in near future which will a blow on the Employment Generation initiative of Govt. of India in the  Private Sector.

We humbly request Hon’ble Governor Sh. Manoj Sinha to constitute a High Level Committee with the participation of stakeholders to resolve the issues in time time-bound manner by providing the following Fiscal Incentives to Existing Units and Units under Substantial Expansion for their survival and Employment Generation.

• • Turnover Incentives should be given on the basis of actual Reimbursement claims submitted by the Industrial Units without any Capping.

• • GST Link Incentive to Existing Units who opt for the Substantial Expansion to manufacture additional Items/change in the line of activity.

• • Purchase Preference to Local MSME Units for the Supply of Goods to State Govt.

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