The Federation of Indian Micro and Small & Medium Enterprises (FISME) has recently advocated for a significant policy change in the realm of e-commerce operations. In a letter addressed to the government, FISME has urged the GST Council to consider allowing MSMEs to register e-commerce operators' warehouses across states as additional places of business (APoB). This proposal aims to facilitate MSMEs in leveraging the online retail route for conducting business, thereby opening up new avenues for growth and expansion.
FISME's initiative is rooted in the concept of enabling MSMEs to register an e-commerce operator's warehouse as an APoB based on the home state PPoB (principal place of business). By doing so, MSMEs can effectively harness the potential of e-commerce platforms to reach a wider customer base and drive business growth. This move is particularly significant in the current business landscape, where online sales have transitioned from being merely an additional revenue stream to a vital lifeline for many enterprises, offering crucial survival opportunities.
In addition to the proposal regarding e-commerce warehouses, FISME has also put forth recommendations concerning the GST rate slab for auto parts and components. The organization has advocated for the application of an 18% GST rate slab to all auto parts and components, emphasizing the potential benefits of streamlining the taxation structure. FISME believes that implementing a uniform GST rate for all parts and accessories will not only alleviate the operational burden on retailers and small producers but also simplify transactions, thereby fostering a more conducive business environment.
Furthermore, FISME has highlighted the pressing issue of input tax credit (ITC) accumulation, which has a substantial impact on MSMEs operating on low capital margins. The organization has underscored the challenges faced by sectors grappling with an inverted GST structure and has called for the resolution of this critical issue. To address the accumulation of ITC, FISME has proposed the conversion of ITC into tradable instruments, secured in nature. This strategic move is envisioned to unlock capital and working capital, thereby injecting liquidity into the market and providing much-needed financial flexibility to MSMEs.
In summary, FISME's proactive engagement with the government and the GST Council reflects a concerted effort to champion the interests of MSMEs and address key operational challenges faced by these enterprises. By advocating for the registration of e-commerce warehouses as additional places of business, proposing a uniform GST rate for auto parts, and presenting innovative solutions to tackle ITC accumulation, FISME is actively contributing to the discourse on policy reforms aimed at fostering a more inclusive and supportive ecosystem for MSMEs in the e-commerce and manufacturing sectors.