MSMEs pin hopes on Union Budget 2024-25 for financial relief and growth incentives

New Delhi [India], July 14 (ANI): As Finance Minister Nirmala Sitharaman prepares for the upcoming Union Budget, the micro, small, and medium enterprises (MSMEs) are hopeful that the government will prioritise and promote their sector.

The Finance Minister will present the Union Budget for 2024-25 on July 23, in her third straight term this year.

The MSME industry has urged the government to provide mechanisms to ease credit and financing, facilitate skill development, reduce compliance costs, and provide incentives to adopt cutting-edge technologies, among other requests.

“The interest rate for MSMEs should be brought to par with housing loans; this will enable them to upgrade their technology, skilled labor, and infrastructure,” said Dr. Vijay Kalantri, Chairman of the World Trade Centre Mumbai and President of the All India Association of Industries (AIAI), who was part of the delegation that met the Finance Minister during the pre-budget deliberations.

Adding to the need for funding and support, Gurmit Singh Arora, National President of the Indian Plumbing Association, said, “The corpus under the Emergency Credit Line Guarantee Scheme was expected to be further extended till at least March 2026, with another Rs 75,000 crores. This would provide much-needed liquidity support to the MSMEs who are, probably, the only entities still reeling from the pandemic.”

“One of the big expectations would be a reduction in compliance costs for MSMEs, usually a reason why most shun formal financing. We will look to see at least 75 lakh MSMEs onboarded onto the Government e-Marketplace portal with measures towards ensuring timely payments; this may help unlock an estimated — lakh crore that gets stuck in delayed payments,” he further added.

The MSME sector has significantly contributed to the country’s GDP over the years. The share of MSME Gross Value Added (GVA) in India’s GDP stood at 29.7 percent in 2017-18, increasing to 30.5 percent in both 2018-19 and 2019-20. Despite the challenges posed by the pandemic, MSMEs managed to sustain a contribution of 27.2 percent in 2020-21, which rose again to 29.1 percent in 2021-22, as per the official estimate of the MSME Ministry.

The Ministry of MSMEs was allocated Rs 22,137.95 crore under the interim Budget 2024-25 for implementing various schemes and technology upgrades.

“For MSMEs, we seek measures to reduce financing costs through interest rate subsidies, ease access to credit, especially for new entrepreneurs through policy measures, and provide comprehensive tax relief and incentives for innovation,” said Pankaj Sharma, CEO of Religare Finvest Ltd.

Highlighting the issue of delayed payments, Winny Patro, CEO & Co-founder of Recordent, said, “MSMEs are still struggling with delayed payments and are caught up in a vicious cycle of cash flow problems. There is a need to address the problem holistically, like how the banking industry got better with timely payments due to credit bureaus.”

Emphasising the need to promote skill development, Parth Parmar, Director of PARE Innovations Pvt Ltd., said, “Skill development programmes are essential for maintaining a skilled workforce for our high-tech manufacturing. Expanding the ‘Make in India’ initiative with tax incentives and simplified regulations will foster innovation and competitiveness.”

In addition, MSMEs also demanded SME-dedicated PLI schemes from the government. Ankit Kumar, CEO of Skye Air, said, “The upcoming budget presents a pivotal opportunity to further the growth of MSME businesses, particularly through the enhancement of the Production-Linked Incentive (PLI) scheme. Expanding the PLI scheme to specifically support MSMEs can significantly boost innovation, production capacity, and global competitiveness. By providing financial incentives and support for technological advancements, the PLI scheme will empower MSMEs to expand their market presence both domestically and globally.”

Recognising the critical role of MSMEs, SBI Research has advocated for a dedicated Production Linked Incentive (PLI) scheme tailored specifically to their unique needs, which could further enhance their sectoral contribution and facilitate broader economic growth across industries such as textiles, garments, food processing, electronics, and more.

“We expect the budget to introduce measures that enhance financial inclusion, simplify GST compliance, and incentivize R&D investments in cutting-edge technologies.

Moreover, initiatives that foster skill development, ease of doing business, and market expansion will be crucial in unlocking our potential,” said Abhinav Mathur, CEO & Managing Director of Kaapi Machines.