In anticipation of Finance Minister Nirmala Sitharaman’s presentation of the interim Budget 2023-24 in the Lok Sabha on February 1, the Micro, Small, and Medium Enterprises (MSME) sector calls for a dedicated financial intervention. Stakeholders seek a tailored package to enhance access to institutional credit at competitive rates, aiming to amplify the sector’s role as India approaches the goal of a USD 5 trillion economy.
The MSME sector, constituting 29.15 percent of the country’s GDP in 2021-22, emphasizes the need for a balanced banking relationship. The Federation of Indian Micro and Small & Medium Enterprises (FISME) highlights the uneven power dynamics, with expectations for Finance Minister Sitharaman to address the sector’s challenges in the upcoming Budget.
FISME Secretary General Anil Bhardwaj underscores issues stemming from the lack of competition in the banking sector and weak regulatory institutions, calling for solutions to create a more favorable environment for MSMEs.
As the last major economic document before the general elections, stakeholders express concerns over the current banking landscape and urge the government to address the sector’s issues comprehensively. They emphasize the importance of credit guarantees, insurance schemes, and digital commerce promotion to boost the sector’s growth.
Despite the MSME sector contributing significantly to exports and employment, only 6 percent actively sell on e-commerce platforms. The consultancy firm Deloitte recommends risk mitigation tools and calls for a reimagined digital commerce ecosystem.
Prominent industry voices, including Puneet Kaura and Rohit Arora, emphasize the MSME sector’s crucial role in India’s economic landscape. Kaura stresses the need for timely credit, while Arora anticipates measures promoting financial inclusion and ease of doing business.
Stakeholders also hope for relief through proposed tax breaks and benefits, with expectations for higher allocations in the upcoming fiscal year. Industry leaders, such as H S Bhatia and Ayush Lohia, advocate for simplified tax structures, reduced interest rates, and expanded credit guarantee schemes to address sector-specific challenges.
Also Read | Democratising cross border trade for Indian MSMEs
As the MSME ministry implements various schemes and programs, the sector looks to the government for targeted measures to address unique challenges and opportunities, fostering sustainable growth in the evolving economic landscape.