Ease of doing business for MSMEs: The Union Budget 2023-24 assumes great importance for the MSME sector which continues to recover from the pandemic-induced challenges. The government has undertaken a number of reforms targeting MSMEs to push their growth in India and also enhance their competitiveness abroad. Ahead of the budget, key experts and voices from the MSME ecosystem have shared their suggestions for the MSME sector with the finance minister Nirmala Sitharaman who will be presenting her fifth budget on Wednesday:
As input costs approach profit potential, the union budget for 2023–24 should provide a consistent and low-cost credit facility for MSMEs. India’s merchandise exports in the financial year 2021–22 grew by 43 per cent compared to the last financial year. This is a great leap, but if the upcoming budget 2023–24 reduces the compliance cost of MSMEs by way of easing GST tax limits, it can help MSMEs make India the shark of the export industry worldwide. Furthermore, Free Trade Agreements with major trading partners will help Indian manufacturing fill the gap left by China on account of its supply chain disruptions due to COVID. India can capitalise on the “Exit China” sentiment with the right support for Indian MSMEs in the form of tax incentives, credit risk mitigation and aggressively investing in creating export clusters at the major manufacturing points especially for lucrative sectors like textiles — Maneet Gohil, Co-founder and CEO of wholesale cross-border platform Lal10.
According to the government’s projections in the last year’s Union Budget, the sector would create at least 60 lakh new jobs and Rs 30 lakh crore in additional output over the next five years. Offering a diverse range of products and services, the MSMEs cater to the demands of domestic as well as global markets, creating and distributing wealth at the grassroots level. By promoting domestic production at relatively lower capital, MSMEs are helping India achieve its goal of becoming a manufacturing superpower and export giant while at the same time reducing dependence on imports. Although everything seems to be hunky-dory for the Indian MSMEs, as recent surveys have shown, it’s a fact that economies across the world are slowing. So, it is better to pull up our socks and act in time to insulate the growth-oriented MSME sector from any kind of uncertainty. In order to achieve the goal of making India a $5 trillion economy by 2025, the country needs constant growth, job creation and exports, and MSME is the sector to bet on. — Yogesh Mudras, Managing Director at exhibtion organiser Informa Markets in India.
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Currently, participation on the invoice discounting platform TReDS is restricted to companies with up to Rs 250 crore annual turnover. However, to reach more MSMEs and buyers, it is important to give larger enterprises access to TReDS. “This policy suggestion has been on hold for a while. Alternatively, participation on TReDs should not be restricted to companies with up to Rs 250 crores in annual revenue; rather, a broad approach should be taken and companies with up to Rs 2,000 crores in annual revenue should be allowed on TReDS,” said Arvind TCA, Co-Founder of supply chain finance structuring firm Artfine.
Solving delayed payments issue
Beginning with delayed payments, around Rs 10.7 lakh crore or an estimated 5.9 per cent of India’s gross value added (GVA) is locked up annually in dues pending to MSMEs, according to a 2022 report published by the non-profit entity for promoting entrepreneurship Global Alliance for Mass Entrepreneurship (GAME). 80 per cent of this estimated amount is owed to micro and small enterprises (MSEs), totalling Rs 8.55 lakh crores. To provide relief to MSMEs from the issue of delayed payments in the budget, delayed payments should be added as an indicator within the EoDB 2.0 (Ease of Doing Business 2.0) under development by the Department of Promotion of Industry and Internal Trade – Madan Padaki, Co-founder of non-profit entity for promoting entrepreneurship Global Alliance for Mass Entrepreneurship (GAME).
Also read: Budget 2023: How far has govt fulfilled last budget’s promises to MSMEs
Traders’ body Confederation of All India Traders (CAIT) in its budget wishlist has urged the government to review the existing Goods and Services Tax (GST) system. It also sought a review of all acts and rules concerning retail trade along with One Nation-One Licence Policy for domestic trade, pension scheme for traders and insurance scheme for traders. CAIT National President BC Bhartia and Secretary General Praveen Khandelwal in a statement said the GST has emerged as one of the most complicated taxation systems and as such a total review of the system is needed to make it a simple taxation system which can be complied with by the traders and augment substantial revenue to the government.
Enhancing tech adoption
Consulting firm Deloitte in its annual pre-budget survey of senior leaders across industries suggested focusing on bringing more MSMEs into the technology fold and providing them with enhanced credit facilities in the upcoming union budget 2023-24. 55 per cent of the 181 respondents collated in an online survey believed that “supporting MSMEs for technological integration in their operations and providing a platform for effective credit facilities would aid this endeavour.” “This signals that there is a growing realization of the importance of bringing MSME onto digital platforms, which will help in building a strong and inclusive digital ecosystem,” the survey report said.
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