MSMEs demand reduction of GST on job work

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As many as 23 industrial associations representing the Micro, Small and Medium-scale Enterprises (MSMEs) met here on January 7 and demanded reduction of GST on engineering job work. The associations plan to wait till the GST Council meeting on January 10 and decide the future course of action. “If the GST is not reduced for engineering job work, we will meet on January 11 and decide on protests. More than 50 industrial associations in Coimbatore will take part in it,” said S. Surulivel, president of the Coimbatore SIDCO Industrial Estate Manufacturers’ Welfare Association.

The government had reduced the GST on job works for textile sector. For engineering units that did job work, the GST rate was 18 %. This should be reduced to 5 %. A small-scale unit that did job work had to wait for nearly three months to get payment. So there was shortage in availability of working capital. The main problem faced by the engineering units because of 18 % GST on job work was shortage of working capital, he said. The banks provided just 20 % of the turnover as working capital. The units had been asking for a change in the working capital norms.

According to J. James, president of the Tamil Nadu Association of Cottage and Micro Enterprises, the associations, which included air compressor manufacturers, wet grinder manufacturers, job working units, and micro units, discussed a host of challenges that the MSMEs faced. They want reduction in interest rates and increase in investment limit for micro industries. But, the priority now is reduction in GST for engineering job work and it is a long-pending demand of the MSMEs. So it was decided to highlight that. If the dates were announced for Lok Sabha elections, there would not be any possibility for changes in GST rates. So, the Council should reduce the rate in its meeting this month, he said.

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