Rajasthan govt brings in ordinance to boost MSMEs, but final guidelines after elections

Move seeks to exempt small businesses from taking approvals from the state government, but some analysts call it an ‘election gimmick’.

File image of Rajasthan Chief Minister Ashok Gehlot | Facebook

New Delhi: Looking to boost small businesses in Rajasthan, the newly-elected Ashok Gehlot government has brought in an ordinance allowing entrepreneurs to start businesses in the state just by presenting self-declaration forms.

Notified through the Micro, Small and Medium Enterprises (MSME) Facilitation of Establishment and Operation Ordinance earlier this month, before the poll code kicked in, the move seeks to exempt small businesses from taking any approval from the state government.

There will also be no inspection on the businesses for a period of three years. The necessary approvals, however, will be required within six months after the initial three-year period is complete. The businesses will also have to adhere to all the legal requirements.

The entrepreneurs can present the declaration forms both physically or electronically.

The Bureau of Investment Promotion (BIP), along with the district industrial centres, will act as the nodal agency for implementation of the ordinance.

In a statement issued on 4 March, Gehlot said, “By simplifying the process of establishing new businesses would save the time, efforts and resources of the entrepreneurs. It would attract more investment in Rajasthan.”

By simplifying the process of establishing new businesses would save the time, efforts and resources of the entrepreneurs. It would attract more investment in #Rajasthan.

— Ashok Gehlot (@ashokgehlot51) March 4, 2019

However, a senior BIP official said the guidelines of the notification are yet to be worked out and will be announced after the Lok Sabha elections.

“The guidelines cannot be announced now due to the elections and code of conduct but as soon as the exercise is over, we will come out with the guidelines,” said the official on condition of anonymity.

The MSME sector, which was crippled after the 8 November 2016 demonetisation exercise and the goods and services tax implementation, is yet to come out of the woods.

Central govt nod required

While the small businesses will be exempt from seeking consent from the state government, certain approvals relating to environment and labour laws that come under the central legislation will have to be duly acquired.

“There are a few areas that need central government’s nod. The entrepreneurs will have to seek those approvals. In that, we cannot help as that does not come in our domain,” the official added.

‘Election gimmick’

ThePrint spoke to some analysts who dismissed the move as an “election gimmick” aimed at the MSMEs, which will play a critical role in the Lok Sabha elections.

However, the Federation of Indian Micro and Small & Medium Enterprises (FISME) said that implementation will be key, with many areas requiring central government nod.

“This is encouraging, and if implemented well, can boost the MSME sector but we have to wait and watch for the final guidelines,” Anil Bhardwaj, secretary general, FISME, told ThePrint.

In January, the Reserve Bank of India had set up a committee under former Securities and Exchange Board of India chairman U.K. Sinha to understand the current challenges and bottlenecks that the MSMEs face. The committee is expected to submit its report by the end of June.