Micro, Small and Medium Enterprises (MSMEs) are all geared up to embrace the new GST regime by making changes in their functional as well as technological strategy, but want government support for training and creating awareness.
Those associated with the MSME sector feel that the “One Tax One Nation” will be a game-changer for the entire economy and that small and medium scale industries need to improve their strategy in the wake of the new regime as big corporate houses already have the required infrastructure in place to become GST compliant.
“Transition to GST will accompany challenges as well as opportunities for MSMEs. We need to focus on the opportunities,” said Jyoti Prakash Gadia, managing director, Resurgent India. He, however, said the sector needs support from the government, especially for training and creating awareness.
According to Ashish Mittal, co-Founder of EasemyGST, the new regime has forced MSMEs to change their functional strategy. “Now companies have to think more about logistics planning and what will be its business impact. Earlier, there was a tendency among companies to focus on the location aspect as it was cheaper to do business in some states while costlier in other states, because of different tax structures. However now with the uniformity in taxes, more focus would be on logistics planning to make business profitable,” he said, adding that as a result of the new regime, companies are getting ready in terms of technology. “Earlier, the accounting and filing was periodic. Now, it is going to be real time uploads. So companies are improving their infrastructure so that their accounts are maintained on a daily basis,” he added.
Realising the importance of the MSME sector, big companies are supporting the MSMEs to be ready for the new tax regime as these are the major suppliers of goods and any problem with MSMEs will disrupt the supply chain and adversely affect the ecosystem. This, in turn, may increase the cost of production leading to higher prices, which may not be good in a competitive market. For the ecosystem to function well, suppliers need to be GST-complaint. India is expected to emerge as a $5 trillion economy by the next decade and the MSME sector is going to be the backbone of it.
Those associated with MSMEs met in the capital this week to discuss about the preparedness to embrace the GST regime and also the challenges faced by them. Officials of companies associated with the MSME sector said that there was a need to strengthen credit access policies. Technological transformation and support from the government for training and skilling were also needed, they said.
Mittal said: “Apart from government support, the bigger companies need to hand-hold the smaller ones so that the entire value chain understands the technological threads of GST compliance and everyone reaps business benefits. Many technological companies are already on the job to strengthen the GST value chain through their various software solutions.”