NITI's Arvind Panagariya bats for tax sops to prop small industries up

NEW DELHI: Tax benefits and labour law reforms could be ways to incentivise India's micro, small and medium enterprises to grow bigger and become competitive, says NITI Aayog's vice chairman Arvind Panagariya.

"Tax is an important incentive but in the entire regulatory regime at least 10 per cent of small firms and 40-50 per cent of the bigger firms bear the brunt of labour laws in the country," he said.

Speaking at the Global MSME Summit, organised by CII, Panagariya said though Indian MSMEs are major providers of employment but they are missing on the efficiency front.

"For MSMEs to be successful and efficient there needs to be large successful enterprises so that the smaller firms can become ancillaries for them. This will help defining competition in the domestic market and help India become competitive," he added.

According to Panagariya, if we want Indian economy to transform tweaking the current equilibrium will just not work. "We need to think bigger and the industry needs to have different mindset and demands to bring about transformational change," he added.

Talking about the role of tech startups in MSME industry Google VP and MD in south-east Asia and India Rajan Anandan said Google is amazed to see the pace of tech startups in India.

"Last year 800 new tech start-ups were funded in India, taking the total number of such startups to 4000. This has made India the 2nd nation with large number of startups," he said.

Going forward, this would significantly increase thus having a rippling effect on MSMEs, he added.