Business owners to protest MSME Act provisions with hunger strike on Feb 20
Updated: Feb 15th, 2024
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| MSMEs (img: Envato Elements) |
Over experiencing a snag in carrying out business due to the payment norms under the micro, small and medium enterprises (MSME) Act, a few business owners have declared a hunger strike on Feb 20 to have their plea heard.
The business owners will carry out their hunger strike from 10 a.m. to 6 p.m.
Merchants associated with Ahmedabad-based business unions have decided to protest the neglect of their demands to review Section 43B(h) under this act.
Business owners allege that this provision applied to micro and small enterprises, but not to medium enterprises. Because of this, the businesses of small enterprises are being shadowed by the mediums.
A clarification is also being asked regarding the merchant traders, who not only don’t fall under this provision but are not under the MSME category as well.
Several textile merchants falling under medium enterprises have pleaded, “We are buying goods over a credit period of 90 to 120 days. Due to this, a payment cannot be made within 15 to 45 days. To avoid the penalty for the violation of this rule, we are returning the previously bought goods.”
Textile merchants have taken up this issue in person with union finance minister Nirmala Sitharaman and expressed their complications.
The merchants had also asked for clarification over whether the Reserve Bank of India’s (RBI) rule of priority lending to registered firms under MSMEs is applicable under the provision of Section 43B (h) or not.
The merchants have also sought clarification on the 45-day payment rule and the provision mandating it.
However, a chartered accountant (CA) with legal expertise has remarked that this section applies to manufacturing companies falling under MSMEs. This section is also applicable to both - the wholesalers and retailers - buying directly from the MSME manufacturer. Other than that, cloth suppliers selling to wholesalers and retailers by processing fabrics also fall under this provision.
Business associations also suggest that the government should implement a mandatory rule of 180-day payment. Over a non-payment in this tenure, an input tax credit (ITC) recall should be filed.
