The Union Budget 2024-2025, presented by Finance Minister Nirmala Sitharaman, brings a host of exciting opportunities for Micro, Small, and Medium Enterprises (MSMEs). Recognizing the critical role of MSMEs in India’s economic landscape, the government has introduced several measures to support their growth and enhance their competitiveness. In this comprehensive blog post, we will delve into the key highlights of the budget that directly impact MSMEs.
Introduction
The 2024-2025 Budget aims to address the pressing needs of MSMEs by providing financial support, easing regulatory burdens, and fostering technological advancements. With a focus on promoting innovation, creating job opportunities, and facilitating ease of doing business, the budget sets the stage for MSMEs to thrive in the coming years.
Credit Guarantee Scheme for MSMEs
One of the significant highlights of the budget is the introduction of a Credit Guarantee Scheme for MSMEs in the manufacturing sector. This scheme aims to facilitate term loans for the purchase of machinery and equipment without the need for collateral or third-party guarantees. A newly constituted self-financing guarantee fund will provide guarantee coverage up to ₹100 crore per applicant, significantly boosting the confidence of MSMEs to invest in new technology and expand their operations.
New Assessment Model for MSME Credit
To streamline the credit assessment process for MSMEs, the budget proposes the development of an in-house capability within public sector banks. This new credit assessment model will rely on the digital footprints of MSMEs, moving away from traditional asset or turnover-based criteria. This innovative approach is expected to improve access to credit for MSMEs, including those without a formal accounting system.
Credit Support During Stress Periods
The budget introduces a mechanism to support MSMEs during periods of financial stress. This initiative ensures the continuation of bank credit to MSMEs when they are in the ‘special mention account’ (SMA) stage, preventing them from slipping into the non-performing asset (NPA) category. This measure will help MSMEs maintain liquidity and continue their operations during challenging times.
Enhanced Mudra Loans
The budget has increased the limit of Mudra loans from ₹10 lakh to ₹20 lakh for entrepreneurs who have successfully repaid previous loans under the ‘Tarun’ category. This enhancement aims to provide additional financial support to MSMEs, enabling them to scale their businesses and contribute to economic growth.
TReDS Platform Expansion
To unlock working capital for MSMEs, the budget proposes reducing the turnover threshold for mandatory onboarding on the Trade Receivables Discounting System (TReDS) platform from ₹500 crore to ₹250 crore. This move will bring more Central Public Sector Enterprises (CPSEs) and companies onto the platform, facilitating quicker payments and improving cash flow for MSMEs.
SIDBI Branch Expansion
In a bid to enhance the reach of credit facilities, the Small Industries Development Bank of India (SIDBI) will open new branches in major MSME clusters across the country. With 24 new branches to be established this year, SIDBI aims to provide direct credit to MSMEs, further supporting their growth and development.
Support for Food Irradiation and Quality Testing
The budget allocates financial support for setting up 50 multi-product food irradiation units and 100 food quality and safety testing labs with NABL accreditation. This initiative will help MSMEs in the food sector ensure the quality and safety of their products, enhancing their competitiveness in domestic and international markets.
E-Commerce Export Hubs
To facilitate MSMEs and traditional artisans in accessing international markets, the budget proposes the establishment of E-Commerce Export Hubs in a public-private-partnership (PPP) mode. These hubs will provide a seamless regulatory and logistical framework, enabling MSMEs to export their products efficiently and competitively.
Internship Opportunities
The government will launch a comprehensive scheme providing internship opportunities in 500 top companies to one crore youth over five years. This initiative will give young professionals valuable exposure to real-life business environments, varied professions, and employment opportunities, thereby strengthening the workforce available to MSMEs.
Industrial Parks and Rental Housing
The budget facilitates the development of investment-ready industrial parks with complete infrastructure in or near 100 cities. Additionally, rental housing with dormitory-type accommodation for industrial workers will be promoted in a PPP mode. These measures aim to create a conducive environment for MSMEs to establish and expand their operations.
Conclusion
The Budget 2024-2025 brings a plethora of opportunities for MSMEs to grow, innovate, and contribute significantly to India’s economic development. With enhanced financial support, regulatory ease, and infrastructure development, MSMEs are well-positioned to capitalize on these opportunities. By leveraging these measures, MSMEs can drive growth, create jobs, and play a pivotal role in realizing the vision of a ‘Viksit Bharat.’
For more detailed information and guidance on availing these opportunities, visit Subsidyseva.com, your one-stop resource for subsidies and support for MSMEs in India.