{"id":130562,"date":"2021-09-01T20:11:16","date_gmt":"2021-09-01T14:41:16","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=130562"},"modified":"2021-09-03T08:59:44","modified_gmt":"2021-09-03T03:29:44","slug":"policy-harmonization-will-help-our-msmes-create-jobs","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/policy-harmonization-will-help-our-msmes-create-jobs\/","title":{"rendered":"Policy harmonization will help our MSMEs create jobs"},"content":{"rendered":"\n<p><strong>Source:<\/strong> This post is based on the article \u201c<strong>Policy harmonization will help our MSMEs create jobs<\/strong>\u201d published in Business Standard on 1st September 2021.<\/p>\n<p><strong>Relevance<\/strong>: e-commerce in India, Flaws in GST structure, challenges faced by MSMEs<\/p>\n<p><strong>Synopsis: <\/strong>India\u2019s <strong>indirect taxation needs immediate harmonization<\/strong> to put offline and online business transactions on par.<\/p>\n<h5><b>Context<\/b><\/h5>\n<p>Only 27% of online small and medium businesses were using e-commerce channels in 2015. After the pandemic, customer behaviour across the globe has shifted towards <strong>purchases through e-commerce platforms, <\/strong>irrespective of product category.<\/p>\n<p>To make the most of this trend, India must reverse all policies that disincentivize MSMEs.<\/p>\n<h5><strong>Problems posed by GST<\/strong><\/h5>\n<p>GST is creating problems for the adoption of e-commerce platforms by MSMEs.<\/p>\n<ul style=\"list-style-type: disc;\">\n<li><strong>First, <\/strong>we have no regulatory clarity on recognizing part-time workers, and this hinders quick expansion.<\/li>\n<li><strong>Second<\/strong>, a <strong>reduced GST of 1% on turnover applies to offline sellers<\/strong> that are selling their wares within a city or state, but no such provision is available for MSMEs using e-com platforms.<\/li>\n<li><strong>Third,<\/strong> there is a new 1% tax-deducted-at-source levy on e-com transactions, over and above GST\u2019s 1% tax-collected-at-source, that businesses using e-com platforms are subject to. Thus, a straight <strong>2% upfront tax deduction on sales disincentivizes the use of online avenues<\/strong> to expand market reach.<\/li>\n<li><strong>Tax refunds<\/strong> can take up to two years, which affects their cash flows for operations.<\/li>\n<\/ul>\n<h5><strong>Other issues<\/strong><\/h5>\n<ol>\n<li>Heavy compliance burden and contradictory provisions in <strong>Income Tax Act <\/strong>and <strong>labour laws, foreign direct investment (FDI) norms,<\/strong> Drugs and Cosmetics Act of 1940.<\/li>\n<li>There are also concerns over <strong>India\u2019s draft foreign trade policy,<\/strong> which is inadequately geared for an online export thrust that would offer MSMEs a significant opportunity.<\/li>\n<li><strong>FDI 2018 rules stopped online platforms <\/strong>from offering products made by entities in which they had a significant direct stake. These stalled investments would have ensured the standardization of quality and packaging, apart from other such market enablers.<\/li>\n<\/ol>\n<h5><strong>Suggestions\/Measures<\/strong><\/h5>\n<ol>\n<li>Need a <strong>proper understanding of term wages<\/strong> for extended work hours.<\/li>\n<li>Allow for <strong>collective discussions with managements<\/strong> in case of any violation of these rights.<\/li>\n<li>Address the need of part time workers in labour codes.<\/li>\n<li>The industrial relations code also needs to be harmonized to <strong>ease the adaptation of MSMEs to automation-rich business realities.<\/strong><\/li>\n<\/ol>\n<p><strong>Conclusion<\/strong>:<\/p>\n<p>To sustain and encourage growth, the entire ecosystem needs to be changed so that MSMEs achieve their potential. It will help shape a new Indian growth story in terms of both GDP and jobs.<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Source: This post is based on the article \u201cPolicy harmonization will help our MSMEs create jobs\u201d published in Business Standard on 1st September 2021. Relevance: e-commerce in India, Flaws in GST structure, challenges faced by MSMEs Synopsis: India\u2019s indirect taxation needs immediate harmonization to put offline and online business transactions on par. Context Only 27%&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/policy-harmonization-will-help-our-msmes-create-jobs\/\">Continue reading <span class=\"screen-reader-text\">Policy harmonization will help our MSMEs create jobs<\/span><\/a><\/p>\n","protected":false},"author":10316,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[8671,216,9471],"class_list":["post-130562","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-changes-in-industrial-policy","tag-gs-paper-3","tag-msme-sector","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704896278},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/130562","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10316"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=130562"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/130562\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=130562"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=130562"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=130562"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}