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As the Union Budget 2024–25 approaches, micro, small, and medium enterprises (MSMEs) are hopeful of significant relief. They are seeking some relaxation in taxes, streamlined GST processes, and overall improvements in ease of doing business. This is crucial for the sector, which encompasses 63 million registered enterprises, according to the Ministry of MSME.
Easy access to credit: Credit availability is one of the biggest challenges faced by MSMEs. As per an Avendus report, there is a credit gap of $530 billion. Dinesh Gulati, COO of IndiaMART, says that access to finance remains a major hurdle. “While credit facilitation initiatives and monitoring delayed payments have provided relief, a dedicated banking policy for easy credit access and speedy disbursement, along with increasing funding for MSME loans and credit guarantees, is necessary.”
He also added that it will be helpful if the tax structure is streamlined in the upcoming Budget to improve operational efficiency. Additionally, tax reductions can be extended to limited liability partnerships (LLPs) and partnership firms in line with those of private limited firms.
Incentives to grow internationally: To enhance India’s global competitiveness, enabling MSMEs to increase exports is crucial. According to Vinod Kumar, President of the India SME Forum, India should earmark a dedicated fund of Rs 5,000 crore for export capacity development, promotion, and marketing to the Ministry of MSME.
India SME Forum is one of India’s largest organisations for MSMEs, and as a combined ask of its 1.2 million subscribers and close to one lakh members (including FIRST and WEF divisions) from the Government of India. The forum has asked for the implementation of export capacity development programmes and starting export facilitation and development centres at district level, and implementing a massive open export familiarisation programme to support first-time MSMEs for visiting and exhibiting in sectoral, B2B exhibitions, in potential markets much like China, Taiwan, Vietnam and South Korea, which offer such opportunities to thousands of small enterprises every year.
According to Gulati, given that the share of MSME-specified products in exports stood at 45% last year, we expect the upcoming budget to prioritise their needs and provide opportunities for their growth and sustainability.
Streamlining GST: Uniformity in GST registrations is a challenge as out of 63 million MSMEs, only 40 million are registered on the UDYAM portal, out of which only 15 million have GST registrations. As per Mukesh Mohan Gupta, President of the Chamber of Indian MSMEs, GST registrations should be made mandatory for all, and payments should be made on a receipt basis rather than an accrual basis.
Since its inception in 2017, there has been a steady rise in GST filings. However, complications in return filings have posed challenges for MSMEs, leading some to discontinue their registrations. Many cancellations have occurred due to filing mistakes and high penalties for partial, late, or non-filing, according to the India SME Forum. To enhance the creditworthiness of informal enterprises, the government should consider including all enterprises under the GST regime, even if their turnover is below Rs 40 lakh for goods and Rs 20 lakh for services, and they are not currently required to register for GST.
Requiring GST and UDYAM registration for all transactions can establish a detailed digital record of MSMEs’ financial activities, according to Gupta.
Reduce financing cost: Non-banking financial companies (NBFCs) also have high hopes from the Budget. Pankaj Sharma, CEO, Religare Finvest Ltd, says, “For MSMEs, we seek measures to reduce financing costs through interest rate subsidies, ease of access to credit, especially for new credit entrepreneurs, through policy measures, and comprehensive tax relief and incentives for innovation.”
Sharma anticipates reforms for NBFCs to enhance liquidity, improve credit flow, and rationalise regulations. Emphasising financial inclusion, digitisation, and innovative funding is crucial. Addressing governance, risk management, and compliance challenges will foster sustainable growth. By prioritising these areas, the government can ensure MSMEs and NBFCs drive economic growth, job creation, and a more inclusive financial ecosystem.
Expanding the production-linked incentive (PLI) scheme to encourage manufacturing, prioritising rural demand, infrastructure development, and innovation to shape the future of the Indian retail landscape, along with strategic measures to drive the integration of artificial intelligence in e-commerce, will further boost sales and propel growth, says Ravi Saxena, Co-founder and CEO of Wonderchef, a Mumbai-based kitchenware brand.
Amit Prasad, Founder and CEO of SatNav Technologies, emphasises the need for incentivising intellectual property rights (IPR) for MSMEs. He notes that MSMEs focused on IPR lack formal funding to grow internationally. The government should incentivise companies creating IPR in India for global markets. By setting growth targets for foreign missions and officers to promote IPR-based entities, the country can achieve significant economic boosts, potentially surpassing the IT services boom, as we aim for a Viksit Bharat by 2047.
The logistics industry is also drawing expectations, as Vineet Agarwal, MD of Transport Corporation of India (TCI), says, “The emphasis on infrastructure development, streamlined regulations, workforce upskilling, and enhanced investment in technology will drive efficiency and sustainability. We look forward to policies that support innovation and ease of doing business, ultimately contributing to the nation’s economic resurgence.
The logistics industry has great hopes as the Union Budget 2024 draws near, says Zaiba Sarang, co-founder of iThink Logistics, adding that important areas of concentration include making large infrastructural expenditures to improve efficiency, such as building multimodal logistics parks and designated freight corridors. For enhanced operations and transparency, embracing cutting-edge technology like AI and IoT needs incentives. Streamlining regulatory procedures will enable the industry to contribute significantly to India’s economic development.
The MSMEs are also highly concerned about the 45-day payment rule, which was implemented in April.
Online Coverage: Business Today