Budget 2020-21: MSMEs share in total exports increased from just 7.5 per in FY18 to nearly 50 per cent in FY19 vis-a-vis 5.9 per cent and 4.8 per cent during FY16 and FY17 respectively.
Union Budget 2020 India: Among key measures required to boost MSME exports, the sector has sought a minimum 50 per cent of market development funds to be earmarked for MSMEs, in the upcoming budget, given that they contribute close to 50 per cent to India’s exports. The contribution stood at 48.10 per cent for FY19 as per the information from Directorate General of Commercial Intelligence and Statistics, MSME Minister Nitin Gadkari had said earlier this year in a written reply in Rajya Sabha.
MSMEs exporters need help of public institutions in overcoming the non-tariff walls especially of standards and testing even as export support establishments such as export promotion councils (EPC) and boards have abjectly failed to understand these challenges, said MSME body Federation of Indian Micro and Small & Medium Enterprises in its pre-budget expectations to the finance minister Nirmala Sitharaman. Hence, in order to help MSMEs amid changing economic scenario, the role of EPCs and Exim Bank requires thorough review in consultation with the beneficiary group, FISME suggested.
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Among other recommendations made were timely GST refunds and any delay to exporters to be tracked through live dashboards. In August this year, Nirmala Sitharaman had announced GST refunds to be paid to MSMEs within 60 days from the date of application. Delay in payments due by government departments, PSU and large organisations to MSMEs has been among the key bottlenecks for small businesses to sustain their business cycles.
Finance Minister was also suggested to have PSUs develop their supply base/ancillaries, which include MSMEs, by building their capabilities. “It would have a benign impact both on domestic and exports front,” said FISME. MSMEs share in exports had increased from just 7.5 per of total exports in FY18 vis-a-vis 5.9 per cent and 4.8 per cent during FY16 and FY17 respectively. Out of close to 98 per cent Indian exporters, which are MSMEs, 83 per cent are micro-enterprises, according to research by the trade finance company for Indian exporters — Drip Capital.