Key voices in the MSME ecosystem have welcomed the measures announced in the union budget 2024-25 by Finance Minister Nirmala Sitharaman while calling out the gaps left. Importantly, the budget skipped providing an update on the demand to revise or repeal the 45-day payment rule from a section of traders, exporters and MSMEs.
Prominent MSME body Federation of Indian Micro and Small & Medium Enterprises (FISME) hailing the steps taken in the budget said the announcement of a fund to help stressed MSMEs red-flagged under the ‘special mention account’ (SMA) category is a “halfway house” as the major issue of a lack of empowered officials at branch levels remains unaddressed.
Vijay Kalantri, Chairman, WTC Mumbai & President, All India Association of Industries (AIAI) noted that the budget lacks major policy measures to support capacity building, manufacturing investment, and infrastructure. Kalantri said the budget could have given incentives for MSMEs to increase production capacity, and invest in R&D.
He added that the government could have also announced measures to further improve the ease of doing business for MSMEs and startups.
“Today, startup founders prefer to register their companies abroad instead of in India because of complex local regulations for registration, fundraising, unfavourable tax treatment while exiting investment, restrictive FEMA guidelines for doing business with foreign clients and so on,” he said.
Mukul Goyal, Co-founder of management consulting firm Stratefix Consulting also highlighted the absence of taxation-related announcements for businesses.
“The budget’s focus on ease of doing business is promising, with measures to streamline regulatory processes and extend tax holidays for startups. Yet, the absence of substantial changes in GST rates is a missed opportunity,” said Goyal.
He maintained that simplifying compliance and reducing the GST burden on essential goods for MSMEs would have provided immediate relief and improved cash flow management.
However, the MSME ecosystem collectively hailed the measures announced in the budget including a Rs 100 crore Credit Guarantee Scheme for manufacturing units, new credit assessment model based on MSME digital footprints, credit support for MSMEs under ‘stress’, enhanced Mudra loan limit, reduced turnover threshold for TReDS, and more.
The expenditure outlay for the MSME Ministry in this year’s budget stood at Rs 22,138 crore, same as the previous year. However, the amount for central sector schemes for MSMEs was increased marginally to Rs 21,868 crore from Rs 21,852 crore in 2023-24 budget estimates.