Presenting the Union Budget 2023, Union Finance Minister Nirmala Sitharaman said that the Revised Credit Guarantee Scheme for Micro, Small and Medium Enterprises (MSMEs) will be effective from April 1, with an investment of ₹9,000 crore.
“This will enable additional collateral-free guaranteed credit of ₹2 lakh crore. Also, the cost of credit will come down by around 1%,” he said.
“Further, in cases of failure by MSMEs to execute contracts during the COVID-19 period, 95% of the forfeited amount relating to bid or performance security shall be returned to them by the Government and Government Undertakings. This will provide relief to MSMEs”, said the Finance Minister.
The total allocation for the Ministry of MSME will see an increase of about 42% for 2023-24, with Rs 22,138 crore being provided as compared to Rs 15,629 crore in 2022-23. Schemes such as the Scheme for Revamping and Augmenting MSME Performance (RAMP) and the Scheme for Regeneration of Traditional Industries (SFURTI) will see a significantly higher allocation compared to FY23.
Federation of Indian Micro and Small and Medium Enterprises (FISME) and Coimbatore District Small Industries Association (CODISSIA) said in press statements that to enable MSMEs to receive timely payments, it has been proposed in the budget that tax on payments made to MSMEs Deduction for expenses incurred will be allowed to the buyers only when the payment is actually made. This means that the buyer cannot claim the deduction without making the payment to the MSME.
FISME said that setting up of a National Financial Information Registry would help in creating a robust information system and help MSMEs to access loans. The Common Universal Identifier for Businesses proposed in the budget will also relieve MSMEs from the need to have multiple identities.