Govt’s recent notification on the MSME sector which is set to enable large corporate and MNCs to take indirect control of the manufacturing sector in India through their subsidiaries

All India Association of Industries(AIAI) is a premier Chamber of Commerce , an apex body  representing the trade, industry and employment since 1956 . AIAI is a think tank established to suggest government about remedial measures in the changing economic scenario.
 
Mr. Vijay Kalantri, president, All India Association of Industries, says, MSME sector needs inner strengthening and not outer strengthening which demotivates than helping survival and growth.
 
If MNCs take indirect control of the MSME sector then it will lead to compromising of interests of the small industries by the bigger ones. Moreover there will always be a conflict of interest between the two which will lead to undesirable disputes in future in context to product pricing against quality and quantity for supply . 
 
The smaller units will be scavenged by the bigger ones in terms of supply of orders with the same having to remain at the mercy and pity of the larger ones. This action thus will result in losing Atmanirbharta or Self Reliance by the smaller units.
 
The Government is up against import of goods however , the same will be set aside as the above directive will  promote trading of imported goods rather than manufacturing and innovation . More importantly because there is no direct incentive for the small units.
 
Further Mr. Kalantri says, the other recent announcements have put both service/trading and manufacturing MSME on par with increased turnover limits. The resultant turnover versus investment in plant and machinery is higher for the manufacturing sector .That is the manufacturing sector has to put in higher efforts to reap benefit of labor, plant and machinery than the service/trading sector.
 
In contrast to the same service/trading enterprises will reap higher privileges than the manufacturing sector due to these underlying reasons.

Also in context to gazette notification excluding export turnover of enterprises to calculate turnover. The same are likely to provide a window for bigger medium and large scale industries to indirectly squeeze in the MSME space, exploit the concessions and privileges, particularly priority lending norms given to banks for the MSME sector and the 25 per cent purchase reservation policies for government departments and public sector undertakings (PSUs).
 
Thus we suggest that,
 
1. The above mentioned directive needs to be scrapped with immediate effect.
 
2. Also the MSME registrations must be restricted to Indian ownership enterprises only. As foreign companies have secured indirect investments and ownership in various MSME ventures taking advantage of such loopholes.
 
3. Export turnover needs to be  included in the turnover limit for the calculation of classification of MSME.
 
4. The purchase reservation policies for MSME should be enhanced from 15% to 25%.
 
5. Interest rate should be brought down to 4% for the MSME sector.
 
Also , we have been reiterating in our every communication that Foreign Consultants should be barred to operate in Government authorities.