ASSOCHAM Study Recommends Simplified Loan Process Sans Collateral For MSMEs

New Delhi, Nov 29 (KNN) In a significant move to bolster credit access for small and medium businesses, India's corporate sector has made a compelling case for increased support from financial institutions and government agencies.

Associated Chambers of Commerce & Industry of India (ASSOCHAM), in collaboration with Egrow Foundation, has released a comprehensive study highlighting the critical challenges faced by micro, small, and medium enterprises (MSMEs) and proposing strategic interventions to address their systemic constraints.

The study, which encompassed quantitative data from over 150 companies and qualitative insights from approximately 120 industry stakeholders, underscores the pivotal role of MSMEs in India's economic landscape.

Currently contributing nearly 30 percent of GDP, 45 percent of manufacturing output, and 46 percent of exports in the fiscal year 2024, MSMEs are recognised as a cornerstone of the nation's economic framework.

Key recommendations from the report include the development of specialised loan products with simplified documentation requirements and reduced collateral demands.

The industry body has also urged the government to establish a dedicated MSME coordination council to streamline scheme implementation and resolve inter-state challenges.

A central grievance portal, modelled after the Reserve Bank of India's Ombudsman system, has been proposed to provide MSMEs with a structured mechanism for addressing departmental and governmental issues.

Financial transparency and tax-related concerns were prominently featured in the recommendations. ASSOCHAM suggested reducing the Tax Deduction at Source (TDS) burden by limiting deduction requirements to salary and non-resident payments.

The report also advocated for a reduction in corporate income tax rates for MSMEs from 25 to 15 percent and a simplified Goods and Services Tax (GST) system to ease compliance procedures.

Addressing the complexities of tax and regulatory frameworks, the study called for a combined taxpayer unit to handle both direct and indirect tax needs.

The report further emphasised the need for a more nuanced approach to GST registration and compliance, recommending a tiered penalty structure that considers the context and severity of potential delays.

ASSOCHAM President Sanjay Nayyar highlighted the strategic importance of these recommendations, stating that the report provides a roadmap for MSMEs to contribute to India's aspiration of becoming a developed country by 2047.

Secretary General Deepak Sood echoed this sentiment, emphasising that realising the vision of a developed India necessitates structural changes in the business ecosystem, with MSMEs playing a crucial role in this transformation.

The comprehensive study serves as a strategic blueprint for policymakers, financial institutions, and government agencies to create a more supportive environment for small and medium enterprises, ultimately contributing to India's economic growth and development.

(KNN Bureau)