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Budget 2022: Women MSMEs seek better credit support, relief in GST and income tax, lower interest rates

Ease of Doing Business for MSMEs: While existing schemes for MSMEs by the government launched post-Covid have come in handy for women MSMEs as well, however, there is a need for a special Covid incentive for women-led businesses for faster recovery, according to experts.

Experts have also suggested lowering the bank interest rate to 6 per cent for loans extended to women borrowers. (Image: pexels)

Ease of Doing Business for MSMEs: Women entrepreneurs in the micro, small and medium enterprise (MSME) or small business segment of the country are expecting a handful of sops from Finance Minister Nirmala Sitharaman in the union budget 2022. The prime ask has been for dedicated credit support for women promoters that have still been recuperating from Covid impact. While existing schemes for MSMEs by the government launched post-Covid have come in handy for women MSMEs as well, however, there is a need for a special Covid incentive for women-led businesses for faster recovery, such as support for adopting the latest technologies, according to experts. 

“Banks don’t really support technology upgradation among MSMEs. Subsidies should be given to entrepreneurs on the first day of the implementation of a project. Banks are not sensitive to the difficulties faced. ECLGS came to the rescue but there are many units that had turned non-performing assets (NPAs). Once they are branded as NPAs, they lose their entrepreneurial spirit as they don’t get loans from anywhere,” K Rama Devi, President at women entrepreneurs body Association of Lady Entrepreneurs of India told Financial Express Online. 

“Bank credit flow to women entrepreneur needs to be strengthened further. In Covid times, we are looking for special consideration and as a special concession, there should be a longer moratorium on credit taken,” Jahnabi Phookan, Director, JTI Group and immediate Past President, FICCI Ladies Organisation (FLO) told Financial Express Online.

Currently, the moratorium offered on the Emergency Credit Line Guarantee Scheme (ECLGS) is one year for ECLGS 1.0 and 2.0 and two years for ECLGS 1.0 extension, 2.0 extension, and 3.0. Experts have also suggested lowering the bank interest rate to 6 per cent for loans extended to women borrowers. 

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“Apart from longer repayment period for loans, the interest rate for women borrowers should be lowered to around 6 per cent from around 12 per cent. Also, the government should come up with measures to support women entrepreneurs in underprivileged sections or rural areas of the country,” Rajni Aggarwal, President, Federation of Indian Women Entrepreneurs told Financial Express Online. 

Rama Devi also sought relaxations in income tax and GST rates for women entrepreneurs along with more focus on entrepreneurship among women. “We focus more on education than entrepreneurship, the focus needs to shift to entrepreneurship. Successful entrepreneurs need not be from top educational institutes. If you want inclusive growth, large industries can follow all norms but small businesses cannot and they are the ones who provide employment. You should support sectors that provide employment and make exemptions in GST and income tax or make it minimum for women entrepreneurs,” she added. 

“Income tax slabs of women should be considered as they have suffered a lot during Covid even as they don’t have the level playing field in the business world. So tax slabs should be looked at by the government,” said Phookan. Providing mentoring, incubation support, market linkages, were among other key asks from the budget for women-led MSMEs in India.

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