‘This government is killing our businesses’: What small, medium enterprises think of GST revisions

After Friday’s GST Council meeting, which decided to cut the goods and services tax rate on two dozen commodities and announced relaxations for exporters and small and medium companies, Prime Minister Narendra Modi said the changes brought in an early Diwali.

The business press was bullish as well. “Three months on, GST now good for small traders,” said one headline.

This ebullience is intriguing. The impact of the Goods and Services Tax is complicated. Billed as India’s biggest tax reform, GST subsumes all the indirect taxes that businesses earlier paid the Centre and states separately with the aim of creating a common market. It involves a complete overhaul of the tax filing system.

Since its implementation on July 1, as several articles in Scroll.in and other publications have shown, small and medium companies in a range of industries are struggling to stay viable while complying with the new tax regime’s requirements. That is not all. GST also affects different companies in the same industry in different ways. For both these reasons, the GST Council’s revisions on Friday deserve a closer look. How far do they go? Do they really address the major concerns of all Micro, Small and Medium Enterprises, also known as MSMEs, in the country?

For ‘Make In India’ to work, India first needs to become globally competitive

Bhoday Sales Corporation is tucked inside the industrial zone of Ludhiana. A small machine tooling factory with a net worth of not more than Rs 10 lakh, it makes manufacturing equipment for other plants in the city.

Of late, it has fallen on bad times. Sales are down. At one time, says its founder, 68- year-old Maan Singh, the company used to make four power presses a month. It now makes one a month.

Bhoday is far from being the only company that is struggling in Punjab. A story published last December in Scroll reported industrial units across the state – steel plants in Mandi Gobindgarh, sporting goods manufacturers in Jalandhar, textile units in Amritsar, bicycle-makers in Ludhiana – were shutting down or relocating to other states. A similar narrative is visible in industrial hubs in three other states that Scroll surveyed…

…Try and understand why and you arrive at the fundamental limitation of the “Make In India” programme.