SME sector optimistic about budgetary support

SME budget wish list

• Tax breaks for cos providing tech support to MSMEs

• The special credit linked capital subsidy scheme

• Subsidizing cost of funds to NBFCs that focus on lending to small merchants for loans below Rs 20 lakhs is way to ensure easy access to credit

• Budget should further look at propelling the country towards a digital future

Mumbai: The Small and mid-size enterprises (SME) sector is looking at various measures which may be announced by the government in the forthcoming Budget so as to ensure its empowerment.

Micro Small and Medium Enterprises (MSMEs) contribute to 30 per cent of our GDP, account for over 45 per cent of EXIM activities and employ more than 11 crore people - this is a testimony to the importance of MSMEs in our economy Ketan Patel, CEO, Mswipe, said: "The SME sector is the backbone of Indian economy. In the upcoming budget, we expect the Government to make announcements that will empower small businesses thereby reviving the economy from the impact of the pandemic. In November 2021, the government announced the special credit linked capital subsidy scheme for the MSMEs (Micro Small and Medium Enterprises) in the services sector. This should be extended to SMEs whose turnover is less than Rs 5 crore as well as it will help them procure service equipment through institutional credit for advancement of their technology."

The Government should also look at tax breaks for companies providing technology support to MSMEs. At a time when we are expecting the third wave of Covid to hit economic activity and businesses are facing difficult times, the Government must take measures to meet the SME lending requirements. Subsidizing the cost of funds to NBFCs that focus on lending to small merchants for loans below Rs 20 lakhs is way to ensure easy access to credit. Besides, we expect the Finance Minister to increase credit guarantee for lending while also providing relief in terms of tax sops or subsidizing manpower cost for digital players to promote digital payments in tier 3 to 6 towns. Lastly, this Budget should further look at propelling the country towards a digital future. While multiple initiatives have been undertaken to promote digital payments, the Government must look at given some form of incentive to small businesses to encourage the adoption of digital payments and further strengthen the payment infrastructure of the country, especially in smaller towns, he added.

The fact that this sector at large continues to be non-digital and heavily dependent on manual operations has exacerbated the impact that the pandemic has had on the MSMEs.

Rahul Raj, Founder & CEO FloBiz, says, "In the wake of the 2022 Budget, we expect a special focus from the government to help this sector recover and accelerate overall economic growth. This can come in the form of funding support to NBFCs to maintain liquidity and promote financial inclusion with a distinctive focus on MSMEs under priority sector lending. In addition, reduction in GST rates and relaxation in compliance burden for MSMEs around taxes, audits and loans will go a long way in helping this sector regain its lost momentum.

Moreover, we hope this upcoming budget will lay out initiatives for infrastructure development that can further promote trade and commerce in the country. The government also needs to encourage institutions and startups aiming to establish digital frameworks for e-KYC, online

payments, digital banking & lending with a special focus on this sector.

India is on the path to become a potential global manufacturing hub. Post the Covid shake-up, economic recovery is still fragile and will necessitate fiscal support. Even globally, the economy is adjusting to the supply chain disruptions due to the pandemic

Prakash P Chhabria, Executive Chairman, Finolex Industries says, "We are optimistic about the Union budget highlighting support measures for agricultural and housing sector that will go a long way to accelerate recovery."

The need for better infrastructure development, digital augmentation, job creation is key to revive the sector and the economy as a whole. We are expecting the Union Budget to boost India as a destination for international companies, he said.