MSMEs play a pivotal role in India's economy, contributing nearly $1 Trillion to the country's GDP and generating 20-25% of total employment. The Union Budget 2023 introduced crucial reforms to improve support for the MSMEs, enhance their overall economic impact, and benefit other small businesses as well. These signal the government's commitment to streamline regulations, boost innovation, improve credit access, and foster the overall growth of MSMEs. Hence, they also contribute to India's economic prosperity.
The Budget expanded the presumptive taxation limits for micro-enterprises. Previously, this was available to MSMEs with a turnover of up to ₹2 Crores and professionals with a turnover of up to ₹50 Lakhs. The revised norms are for ₹3 Crores (MSMEs) and ₹75 Lakhs (professionals) respectively, for taxpayers with less than 5% cash receipts. These adjustments align with the government's commitment to foster a positive environment for the growth of MSMEs.
The government also proposed a policy to address payment challenges of MSMEs wherein buyers can only deduct expenditures if timely payments are made to MSMEs. This move eliminates claiming deductions without settling dues, compelling buyers to prioritize clearing payments owed to small businesses. The initiative reflects the government's dedication towards the MSME industry's financial stability by ensuring fair and prompt transactions.
MSMEs also benefitted from the Vivad se Vishwas scheme, where the Government will refund 95% of forfeited amounts to MSME suppliers impacted by the COVID-19 pandemic. Beyond providing relief to those facing financial challenges due to the pandemic, this initiative targets those who lack access to institutional financing and experience capital restrictions. The scheme aims to peacefully resolve any pending direct tax disputes of the MSME players.
The government's initiative to establish a DigiLocker for MSMEs denotes a push towards digitisation in lending practices. This platform facilitates the digital storage of documents and aims to streamline the loan application process for micro, small, and medium enterprises. The DigiLocker uses PAN as common identifiers for digital systems of government agencies and offers a convenient and secure means for businesses to share documents online. This move aligns with the government's efforts to enhance accessibility and efficiency in MSME lending.
The proposed Skill India digital platform was a crucial reform of the Union Budget 2023, which aims to provide a unified approach to formal skilling. It aims to connect job-seekers with employers, including MSMEs, fostering entrepreneurship and meeting industry demands. Through Recognition of Prior Learning (RPL) and upskilling programs, this initiative underscores a commitment to enhancing skills within the MSME sector. It is implemented in phases and aligns with the broader goal of integrating skill development with economic opportunities for MSMEs.
The newly introduced Pradhan Mantri Vishwakarma Kaushal Samman (PM-VIKAS) scheme supports artisans by enhancing product quality and integration into the value chains of MSMEs. Its key components include –
Access to advanced skill training
Linkage with global and local markets
Knowledge of modern digital techniques
This comprehensive package aims to uplift artisans, providing holistic assistance for their growth and development.
The government has substantially increased the budget allocation for MSMEs, to approximately ₹22,140 Crores. This reflects a significant 42% boost from earlier years. The increased allocation aims to implement diverse schemes and help in easy access to infrastructure development, technology upgrades, and sectoral credit. Additionally, the government has proposed tax incentives and subsidies to further empower MSMEs and upscale their growth and importance in India's evolving economy.
A pivotal measure in Budget 2023 was the introduction of a ₹10,000 Crore fund dedicated to technology and infrastructure development within the MSME sector. This fund will financially support MSMEs to adopt new technologies, enhance production processes, and modernise their operations. The proposal also includes the establishment of a national-level mentorship program for MSMEs. This reflects a strategic initiative towards technological advancement and sustained growth in the sector.
The Union Budget 2023 boosted the MSME sector with the revamped Credit Guarantee Trust for Small Micro-Enterprises (CGTMSE) Scheme. From 1st April 2023, ₹9,000 Crores was allocated to this scheme effective April 1, 2023, facilitating an additional credit of ₹2 Lakh Crores for MSMEs. This revamp will reduce credit costs by 1%, promote employment, and support the growth of small businesses.
India's evolving MSME industry, marked by increased credit access and streamlined regulations, presents abundant growth opportunities. The emphasis on innovation and financial accessibility via modern lenders like NBFCs further fuels the sector. Platforms like Bajaj Markets offer you convenient financing options, like Business Loans, to facilitate your venture's financial needs. Here, you can get convenient loan terms for your small-scale business, such as amounts up to ₹50 Lakhs at moderate interest rates. Find the perfect financing solution for your small-scale business on Bajaj Markets today!