Budget 2023: Micro, Small and Medium Enterprises (MSMEs) appear to be the economic growth drivers of India, accounting for about 30% of the country’s GDP. They also serve as the driving force behind 48% of export markets, 95% of the country’s industrial plants and 40% of India’s working population employment. It is one of the fastest growing and most developed sectors of the Indian economy.
Considering the headlines as well as the attention of the authorities, the economic downturn induced by the pandemic has brought many problems to the fore.
Given the importance of industry in driving the Indian economy, there has been a steady increase in the budgetary allocation for industry in recent years. The government has taken several initiatives to encourage the growth of MSMEs, including the Make in India initiative, where it seeks to promote domestic production while reducing dependence on foreign imports, while improving India’s position on the Ease of Doing Business Index. also wants to strengthen To boost the global competitiveness of Indian MSMEs, the government may announce changes in the sector’s duty structure for exports and imports in the upcoming Union Budget.
Expectations of MSME Industry:
As the MSME sector recovers from the pandemic slump, here are some of the industry’s preconceived notions for the upcoming budget.
AdCountry Media Pvt. According to Kumar Sourav, Global Mobile Business Head. Ltd., “The primary expectation of the MSME Budget for 2023-24 is to increase access to working capital. However, the Government of India is already looking forward to restructuring the Credit Guarantee Scheme and initiatives such as Udyam, e-Shram, and full integration of the National Career Service and ASEEM portals. It has also extended the non-tax benefits for MSMEs to 3 years. Along with this, marketing and education to leverage technology is vital for the growth of MSMEs and is imperative to make India self-reliant. MSMEs are not only the largest employment generators but also the largest tax payers in the country. However, these small companies, which operate with a sense of survival, often face difficulties when their working capital gets disrupted due to delayed payments and disruptions in the supply chain.”
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According to a November 2022 report by KPMG, “Accelerating the flow of credit to small enterprises is essential for India to achieve its dream of a $5 trillion economy by 2025, as the MSME sector of the country is the fifth largest economy in the world.” playing an important role in its emergence as Banking Finance Companies (NBFCs) and Housing Finance Companies (HFCs). The report also states that though the MSME sector has suffered huge economic losses due to the Covid pandemic, it is recovering on the back of concerted policy initiatives by the government. MSME loan market to grow from Rs 31 lakh crore in March 2020 to Rs 36.4 lakh crore by June 2022, with 88 per cent of registered borrowers being from the micro-segment, 10 per cent from the small segment, and only 2 per cent from the medium segment , the report showed,” he said.
According to Riddhima Kansal, Director, Rosemoor, “Budget 2023 should prioritize reforms to improve the process of business operations for the MSME sector. At the same time, there is an urgent need to implement policies that reduce input costs, increase liquidity, and promote financial inclusion by offering affordable financial products to small firms. Small enterprises, as well as business owners, should be supported in ways that allow greater investment in innovation and tax breaks, such as startup-friendly initiatives, to propel business owners forward.
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Initiatives like easy access to funds and tax cuts have been taken, which will put small firms in a strong position to prosper and then become internationally competitive. The initiative of Account Aggregator (AA) and Open Credit Enablement Network (OCEN) has come as a big relief to the MSME sector. Ashish Agarwal, director, Acube Ventures, says Budget 2023 is expected to include supportive measures aimed at democratizing credit and accelerating financial inclusion.