10 key take-aways for MSMEs in Budget (2021-22)
New Delhi, Feb 2 (KNN) The 10 key take-aways for MSMEs in Budget (2021-22):
-- 1. The Budget signals a massive investment in infrastructure (highways, ports, waterways, power etc) and push for low cost housing. It opens up huge demand not only for the primary producers but MSME products as well. (There are 60 MSME product categories directly linked to Housing alone).
-- 2. The near double increase in the allocation to the Ministry of MSME is laudable. However, the Lion’s share is likely to be taken away for the corpus of the credit guarantee company, backstopping the ECLGS. In that case, allocation for the existing successful schemes of the Ministry like Credit Linked Subsidy, Cluster development programme, could stagnate or even be curtailed.
-- 3. Enhancing Customs Duty on items of a wide range to promote Atmanirbhar Bharat mission is another welcome step but alongside Minimum Import Price should also be introduced for finished consumer items to stop their dumping in India.
-- 4. For a bulk of down-stream users of other inputs whose process has soared, not much relief though. With an enormous Forex reserve Government should have allowed easy import of Metals and other industrial raw materials whose domestic price is skyrocketing, causing high input costs to MSMEs.
-- 5. Enhancement of the share capital / turnover limits for Small Companies under the Companies Act, is also laudable. The Chapter on Small Companies provides easy regulatory compliance but even the new limit is too low for micro and small enterprises and the turnover criteria could have been matched with definition of MSMEs for real gains to facilitate compliance at low costs to the sector at large.
-- 6. There were widespread expectations that the ECLGS scheme for MSMEs will be extended to all Medium enterprises and also to nearly 2 lakh MSMEs whose loan restructuring is pending. However, the budget has offered to comment in this regard.
-- 7. Revival of the state finance corporations to provide easy project finance to MSMEs is a long pending demand. While the FM has announced a development finance institution for infrastructure, there should have been at least a financing window for states willing to restart the SFCs.
-- 8. Various facilitations for small taxpayers under direct tax laws will surely help micro and small companies in easy compliance.
-- 9. FM announced a special framework under Insolvency and Bankruptcy Act for MSMEs. Let’s hope this will address the long pending regulation for partnership and proprietary firms, 97% of the MSMEs belong to this category.
-- 10. Public procurement is often complicated and MSME suppliers are at a receiving end leading to long drawn legal disputes. The Budget proposes setting up of a ‘Conciliation Mechanism’ with mandate of its use for quick resolution of contractual disputes.
(Compiled and analyzed by Federation of Indian Micro and Small & Medium Enterprises - FISME)