Experts from the manufacturing, MSME, and e-commerce sectors are rallying for an expansion of the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to address the credit gap that plagues MSMEs in the upcoming Union Budget 2024.
Read the complete budget expectations from Manufacturing, MSMEs, and e-commerce sectors:
Amit Bansal, CEO, Solv
As one of the leading B2B e-commerce industry experts, Solv calls on the new government to prioritize the MSME sector in the upcoming budget. Expanding the reach of the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) and promoting innovative lending models are crucial to bridging the credit gap that MSMEs face. Simplifying compliance procedures and reducing regulatory complexities will unleash the true potential of these enterprises.
Moreover, as India stands on the cusp of significant technological advancement, encouraging technology adoption through targeted incentives and supporting initiatives like Startup India and Stand-up India will fuel innovation and drive inclusive economic growth. By focusing on these key areas, the budget can empower millions of entrepreneurs, fostering a resilient and dynamic Indian economy.
Viren Choudary, CEO of Readywire
MSMEs are the backbone of the Indian economy. I hope the budget introduces policies that encourage the adoption of systemic digitization and AI-driven technologies in this sector. Providing subsidies and other incentives to infuse tech into their processes will improve productivity and yield manifold returns to the economy.
A Kulandai Vadivelu, Chief Financial Officer, TVS Electronics (TVS-E)
There is a pressing need for a growth-oriented tax environment to catalyze India’s economic progress and from the Upcoming Union Budget, we expect The Finance Minister to look at reforming the Goods and Services Tax (GST) structure, including rationalization of rates and simplification of compliance procedures.
The manufacturing sector is very capital-intensive and the introduction of tax holidays and enhanced input credits for upcoming manufacturing units will be crucial in stabilizing operations and expansion. Overall, industry-friendly tax assessments can reduce the time and effort spent on compliance and in turn, allow companies to focus on growth.
India’s manufacturing sector will be a key contributor towards the goal of becoming a $10 trillion economy. The budget should emphasize making India self-reliant and become a global manufacturing hub, and in turn boost the Make-in-India initiative. Hence, policies that support local manufacturing will be helpful.
According to the latest report by the CII, India’s Electronics Manufacturing is expected to reach USD500Bn by 2030. One of the key pillars of the growing electronics manufacturing industry is electronics manufacturing services (EMS), which includes services such as designing, manufacturing, testing, distributing and servicing electronic components and assemblies for OEMs. PLIs for the EMS sector will increase the contribution of the manufacturing industry towards our economy, and help create jobs, which is the need of the hour.
Extending incentives for research and development (R&D) and digitalization will contribute towards creating an enabling environment for the expansion of the sector and also position India as a factory for the world.
Tushar Bhaskar, Chief Business Officer, Rubix Data Sciences
Indian MSMEs are the backbone of our economy, and we expect significant measures in the Union Budget to address their pain points, particularly in accessing finance. A recent estimate suggests a $530 billion credit gap. Streamlined loan processes, data-driven credit assessments, and risk-sharing schemes are the solutions to bridge this gap and unlock immense growth potential.
Beyond financial relief, MSMEs require a more supportive ecosystem, which includes tax reforms like streamlined GST, tax breaks for new businesses, and potentially even lower corporate tax rates. There is also a need to simplify GST compliance procedures and other regulations and streamline labor laws. These measures would reduce administrative workloads and boost entrepreneurial activities.
Additionally, investments in R&D, infrastructure, digitalization, and skill development are crucial for MSMEs to compete effectively. Developing common facility centers with advanced machinery and technology would significantly aid MSMEs in enhancing their operational efficiency and driving innovation. Promoting exports and improving market access are critical for MSMEs to expand their reach. Therefore, the budget should include incentives to boost MSME exports and open new markets. Enhanced support for participation in international trade fairs and exhibitions would provide MSMEs with greater exposure and opportunities to scale up.
Lastly, sustainability and green initiatives are becoming increasingly important. MSMEs are seeking incentives to adopt sustainable practices and transition to green technologies, as they will not only help MSMEs reduce their operational costs but also improve their attractiveness to conscious consumers and international partners. By addressing these diverse needs, the Union Budget can enhance MSME competitiveness, efficiency, and sustainability, ensuring they continue to drive the Indian economy forward.
Subash Vasudevan, CBO and Co-founder, iBUS Networks
The upcoming Union Budget presents a critical juncture to catalyze India’s economic growth and competitiveness. For MSMEs, it is important to preserve favorable payment terms. The quicker receipt of accounts receivable is beneficial and can be further explored & accelerated. It is essential to implement measures that enhance the MSME ecosystem by extending credit facilities and increasing the overall credit available relative to the company’s net worth.
Given India’s ongoing development and investment in digital infrastructure like payment gateways, it would be good to have policies designating digital infrastructure as an essential service to accelerate digital transformation. This would help reduce barriers to deploying mobile internet or fixed lines, such as exorbitant rentals for public or private property, and ensure affordable internet access for all.
Additionally, targeted incentives for sustainable practices in the power-intensive telecom sector and a more favorable tax regime for ESOPs are essential to foster innovation and attract top talent.
Winny Patro, CEO and Co-Founder, Recordent India
In the age of data and technology solving many problems for businesses, MSMEs are still struggling with delayed payments and are caught up in a vicious cycle of cash flow problems. An SME entrepreneur spends more time dealing with late payments than growing his business. The introduction of section 43B(H) had an impact around the end of the financial year 2024 closing and will again only impact late payers during FY closings. Access to working capital and MSMEs samadhan filing addresses the cash flow at the fag end of the problem.
There is a need to address the problem holistically like how the banking industry got better with timely payments due to credit bureaus. MSME data stack could be one of the solutions to reduce credit risk and avoid late payments. In addition to this, benchmarking payment terms based on sectors and the nature of products/services could be another solution. Hoping that the upcoming budget gives importance to solve this massive problem of ₹10 lakh+ crore late payments stuck in the MSME sector in India.
VV Subramaniam, Founder & CEO, SmartGate By Happy Visitor
As we look ahead to Budget 2024, there are several key areas of interest for us at Happy Visitor. Firstly, it will be interesting to observe the measures introduced to help MSMEs become truly Aatma Nirbhar (self-reliant)* Lastly, we are keen to see initiatives that encourage companies to work towards sustainability and achieve their ESG (Environmental, Social, and Governance) goals. Incorporating eco-friendly practices is not just beneficial for the environment but also for long-term business viability. We believe these steps will pave the way for a resilient and forward-thinking economy.
Samit Jain, Managing Director, PLUSS Advanced Technologies
Great focus has been given by the ministry and government over the last years on expanding the adoption of clean technologies and also supporting the growth of startups as well as MSMEs. None of this will bear fruits unless the government takes drastic steps to improve infrastructure and lower production costs for MSMEs. Power infrastructure has to be upgraded in all industrial areas. Further simplification of labor laws is necessary and reduces the compliance costs. Clearances for pollution control need to be streamlined and made simpler for organizations to adhere to.
To further R&D, direct funding or grants to industry is necessary, rather than through universities. The industry needs to be able to control and drive new investments in research. Energy circularity needs to be promoted by giving incentives to industry and commercial infrastructure that can significantly demonstrate the reuse of energy. Just like being done for reuse of water. This will grow major segments like thermal energy storage, which is gaining prevalence in Europe but not yet in India.
