From uplifting women enterprises to SME Asaan Scheme: New government policy for SMEs to revolutionize the sector

The policy was made in 2007 but only on papers. However, this time, it is being introduced with an implementation mechanism.

A new policy for the Small and Medium Enterprises (SME) sector has been announced by the government on Wednesday. The policy focuses on promoting around 5 million businesses through facilitation in registration, streamlining taxes, access to credit, and provision of land.

Details of the Policy

Industries and Production Minister Khusro Bakhtiar announced the SME policy at a joint press conference with Information Minister Fawad Chaudhry. Bakhtiar said:

The policy was made in 2007 but only on papers. However, this time, it is being introduced with an implementation mechanism under the supervision of the National Coordination Committee with proper deadlines of tasks.

He further shared:

The policy is not only directional, but many of its initiatives have already been implemented. The policy has relieved the businessmen of a regulatory burden by either excluding the condition of obtaining a no-objection certificate (NOC) or minimizing its requirements. Anyone interested in starting a new business will not have to go from pillar to post for obtaining the NOC or involving any inspector. A ‘Zero time to start up’ initiative has been introduced, under which the sector has been divided into three categories: low, medium, and high-risk SMEs.

Initiatives under the Policy

Elaborating on various initiatives, the Industries and Production Minister stated:

The NOC condition for the low-risk businesses, including the services sector, wholesale transport has been abolished. In contrast, medium-risk businesses such as light engineering, leather, auto parts, sports goods, and cutlery can get approval in 30 days. The SMEs working in explosives, fire, boiler, and chemicals have been put in the high-risk category.

According to Bakhtiar, the policy introduces a self-declaration scheme under which the businessmen will follow the relevant laws voluntarily. He said:

Only 2 percent of the self-declaration would be inspected physically. The government has developed a web portal through which the businesses that will be inspected will be given the inspection date. This will reduce human intervention and promote transparency and check corruption.

Another initiative taken under the scheme is the streamlining of taxes for SMEs. Explaining this, Bakhtiar said:

Under the policy, a turnover tax of 1.25% has been reduced to 0.25% for the business having a turnover of less than Rs. 100 million and 0.5% for those having turnover from Rs. 100 million to Rs. 250 million. However, if anyone is not interested in turnover tax and wants to claim withholding tax, then they will have to opt for income tax mode, which will be 7.5% for businesses with a turnover of less than Rs. 1 million and 15% for those having turn over from over Rs. 100 million to Rs. 250 million.

The Industries and Production Minister further shared:

”Under the new policy, women’s enterprises have been given a 25% rebate in tax. The government has already taken these initiatives. In addition to giving people access to finances, the government has launched the SME Asaan Scheme, under which the federal government and commercial banks would give guarantee-free loans of up to Rs. 10 million to 30,000 new businesses. In case of business failure, 40 to 60% loss would be borne by the government and the commercial banks. The government has already earmarked Rs. 23.5 billion for this purpose. There are several other schemes the government will introduce to promote the SME sector”.

Speaking about the provision of land, Bakhtiar said:

The Federal Government, in collaboration with Punjab and Balochistan, and Khyber Pakhtunkhawa governments, has earmarked 4,200 acres of land, which would be transformed into 19,500 plots to provide to the businessman on easy loans. ISindh, the federal government would provide such plots in Karachi from industrial parks. However, at the same time, I request the Sindh government to earmark the land for distribution among the SMEs.

Concluding the statement, the Minister said:

”The government has earmarked Rs. 30 billion funds for the Small and Medium Enterprise Development Authority (Smeda) which will be utilized to develop the SME zones in Wazirabad, Gujranwala, and Gujarat triangle. SMEDA is also being transformed to make it a private-sector-driven body. The SMEs will also have a share in public procurement. A plan is being prepared to fix quotas for SMEs”.

The Importance of SME Sector

The SME sector plays a crucial role in promoting inclusive economic growth and providing 78% of employment, excluding agriculture, and promoting exports. At present, there are around 5 million SME businesses in the country, including 1 million in the manufacturing sector.

Fawad Chaudhry also spoke during the conference to highlight the importance of developing a strong industrial foundation to promote growth and cater to the needs of the 220 million population. He said that promoting the industrial sector is the key to eliminating economic problems.

What are your thoughts on this? Please share with us in the comment section below.

Featured Content⭐