The Micro, Small and Medium Enterprise (MSME) ministry has requested the finance ministry to resolve the double-taxation issue faced by private equity investors, who want to invest in the small scale business sector which contributes about 8 per cent to the economy. MSME Ministry has revealed that private equity players, like angel investors, are facing the problem of double-taxation in India. Angel investors are affluent individuals who provide the capital for a business start-up in exchange of convertible debt or ownership equity. They are usually hesitant to invest in MSMEs due to the high risks involved in this sector.
The MSME Ministry is working in conjunction with the Planning Commission on the need to provide different routes of easy credit to these units during the 12th Plan period. They face major challenges like lack of equity, risk capital and poor access to timely and affordable loans.
The Planning Commission has formed a working group on MSME’s growth. The group aims to resolve problems like credit and institutional finance to the unorganised sector.
