With the rollout of GST 2.0 on September 22, smaller vendors across pharmaceutical, textiles and fertiliser sectors, who are likely to face challenges due to accumulation of input tax credit (ITC), have sought help from the larger players.
While several larger players are beginning to extend a helping hand, offering support through credit facilities, smaller firms expect more cushioning from corporates and the government. Smaller players are seeking help from their larger counterparts for faster clearance of payments and hassle-free refund process.
“Larger players in the pharmaceutical sector can play a key role in supporting smaller companies through knowledge-sharing and collaborative models. Assisting with GST, ITC, and general business financial strategies, we can help smaller players alleviate some of the compliance burdens. Larger players can participate in contract manufacturing and pursue joint distribution as well as collaborative logistics to help ease the burden on smaller firms,” said Jeevan Kasara, Director and CEO, Steris Healthcare.
Abbott, for instance, announced that all purchases made between September 1 and September 30 will be eligible for an additional credit period of 30 days — an gesture aimed at easing the transition. Even Sun Pharma assured to help to smaller players and distributors.
The fertiliser sector is adopting a similar stance. “Larger players like us can assist smaller players in the form of extended credit facilities, joint logistic arrangements, and sharing of compliance knowledge under GST. Larger players can assist in mitigating the financial strain that smaller players might experience during this transition,” said Abhishek Wadekar, Founder Chairman, Tradelink International.
In the textiles sector, smaller firms have asked their bigger clients for quicker clearances and more equitable procurement practices. “Bigger companies can extend faster payment cycles, ensure fair procurement practices, and even share knowledge on compliance, sustainability, and new technologies. Many MSMEs face challenges in working capital and market access, and partnerships with established players can give them stability,” said Dharmesh Dattani, CFO, Vishal Fabrics.
Industry associations are also stepping in. The Federation of Indian Micro and Small & Medium Enterprises (FISME) has written to the government on behalf of micronutrient fertiliser and drug manufacturers, urging concessional rates on inputs taxed at 18% but used in the production of goods taxed at 5%. The request suggests a concessional rate of 8% to address the inversion challenge.
