Before the Finance Minister Nirmala Sitharaman presents the Union Budget in the Parliament on February 1, 2021.
Here’s what the MSMEs sector expects from the Government:
Mr. Vinay Jain, Founder & CEO, Grafdoer:
“The Ministry of Finance will be presenting the budget on 1st February for the assessment year 2021-2022, and everyone including corporates, individuals, taxpayers and professionals have different expectations from the upcoming budget.
Considering the slowdown in the economy and growth, MSMEs which form part of the backbone of the Indian value chain are expecting a big relief and reforms in the upcoming budget.
We expect that the upcoming budget will take stringent actions to empower the MSME sector to revive the economy from the current slowdown. Apart from GST rationalization, we expect extension of credit facilities from the upcoming budget, since the Government should focus on infusing liquidity into the markets and promoting ‘Make in India’.”
Quote by Mr. Kapil Bhatia, CEO, UniMask:
“MSME has always been the backbone of the Indian Economy with around 29 percent share to India’s GDP. We expect the government to re-establish favorable policies and allocate substantial funds for the growth of MSMEs. 2020 was a blessing in disguise for MSME industry where the initial most of 2020 was quite brutal but the later half came to the rescue especially with the #boycottchinesegoods campaign and push towards Make-In-India.
The MSME sector is hoping to get rid of challenges like lack of access to capital, infrastructure, skilled labor, and power supply issues that plague MSMEs in India. Therefore, Indian entrepreneurs hope that the Union Budget 2021 will provide some long-term benefits to the sector with better access to credit and lenient taxation policies.”
Sameer Nigam, CEO & Co-founder, Stratbeans:
“The Union Budget for FY 22 is one of the most anticipated socio-economic events for this year. As the Government and many other agencies have projected slower economic growth via the last financial year, there will be more emphasis on ‘ease of doing businesses. Needless to say, the general public and businesses are really hopeful for some major relief in the budget announcements. The Government has already taken a slew of measures to reduce the compliance burden upon businesses across industries. The Union Budget will also bring out more ways to ease liquidity for MSMEs.
The IT industry has been the backbone for Digital India and Startup India. Providing the right incentives to the industry will be the key for the country’s economic revival. One such incentive is to simplify the tax-related complexities to encourage global trade of software products from and to India. Some effort in this direction will help increase revenue for the exchequer that can flow back into the country for socio-economic welfare.
Another important area for improvement is to introduce measures that encourage corporates as well as individuals to pay taxes and contribute to the nation’s progress. This will also create a collaborative, nationwide effort towards building a great nation.”
Mr. Dharmendra Ahuja, Founder & CEO, PitchWorx:
“Due to pandemic, the year 2020 has been a big year for all of us. It has drastically ravaged economies across the globe wherein MSMEs have borne the maximum brunt. While some had to shut their businesses, several organizations reduced employment and have elected to cut the pay of their employees or furloughs in order to keep the business afloat.
Despite the continuous innovation, several start-ups failed due to funding crunch, tax burden, rigid compliances, and poor technological development.
To cope up with this, budget 2021 should focus on enabling the development of MSMEs by providing them access to easy credit, reducing income tax rate & GST tax rate, and offering rebates to MSMEs willing to adopt new technologies.
During the pandemic, we have seen a boom in the digital adoption where MSMEs are contributing the most. In the union budget 2021, it is for the government to ensure that the right thrust is given to build robust tech ecosystem with favourable tax policies and upskilling or reskilling the workforce in the segment to pave the way towards the strong economic growth.”
Samir Sathe, Executive Vice President, Wadhwani Advantage at Wadhwani Foundation:
“The government must do three things; firstly, improving the capabilities of MSMEs to help them generate demand from large companies, secondly, creating market access sector specific platforms in chosen industries of national advantage, and finally treat SMEs and startups with an integrated approach than with a stand-alone one, for the mutually reinforcing system wide impact”.
Mr. Alok Bansal, Managing Director & Country Head, India at Visionet:
“With technological disruption gradually becoming a catalyst for the rise of MSMEs and startups today, it is expected that the government will make the necessary investments in technology hubs, which in turn will help in strengthening emerging technologies like AI, machine learning, and the Internet of Things (IoT). As the country is amidst a boom in digital technology adoption, this year’s Union Budget needs to make way for relevant measures to ensure that the right amount of thrust is given to tech build-up, favorable tax policies, and other opportunities will spell progress for the MSMEs.
The government also needs to make substantial efforts to set up a robust digital ecosystem for encouraging budding entrepreneurs and introduce measures that make it even easier to conduct business in India. This will be highly beneficial for startups and SMEs. It will further attract more companies and organizations to set up their offices or invest in India.
The government should pay attention to employing technologies that can be used to upskill or reskill the workforce employed by India’s MSME sector. Specialized tech centers can be set up and operated by the government and industry groups to equip the workforce with the required skills and perform AI-empowered hybrid jobs. Such interventions by the government have numerous upsides to them, starting with increased earning potential that will pave the way towards the strong economic growth of the MSME sector.”
Ms. Meghna Suryakumar, Founder and CEO, Crediwatch:
We hear from the MSME community that while headline numbers suggest a revival in the economy, that ground realities are different.
There is a need for one-time tax breaks for FY21 to small businesses to spur revival post the pandemic. The current GST consent architecture is complicated and cumbersome to small businesses.
Consent is required every time there is a need to extract invoice related data – we recommend a more seamless architecture where a one-time consent can be provided (with limited validity) to access GST data.
The new Udyam registration portal for MSMEs launched in July 2020 along with the new MSME definition has seen registration of almost 11 lakh MSMEs till November.
Given that Udyam is integrated with CBDT and GST, we see such integrations to be a driver of data transparency for small businesses in India.
In particular, for GST, we expect to see more disclosure by the GST network to help lenders and partners assess this financial data source with much ease.”
Ketan Gaikwad, CEO & MD of RXIL:
“For TReDS, we are hopeful to see Trade Credit Insurance going live along with amendments to the Factoring Act which will allow NBFCs to come onboard. This would open TReDS to a wider spectrum of MSMEs and allow more inclusivity of diverse corporate buyers.
Another important change we are counting on is the timebound integration of e-invoicing & GST. We hope the Hon’ble Union Finance Minister would continue to work towards creating an enabling environment for TReDS to reach out to the vast majority of MSMEs which are not able to access it whether due to the lack of adequate KYC, non-compliance of the corporate buyer, or lack of awareness.
If the Budget allows expansion of the Central KYC (‘C-KYC’) registry to onboard the MSMEs, it will be a game-changer as it would reduce the time and costs incurred for discounting MSME receivables.
2021 is a crucial year for the Indian economy to recover from the pandemic’s effects and we are hoping these developments if announced in the upcoming Budget session, will help TReDS in providing more MSMEs access to finance.”
Mr. Niraj Hutheesing, Founder and Managing Director, Cygnet Infotech:
“The ’21 Union Budget provides two big opportunities. Firstly, boost economic growth by scaling investment in digitization.
Secondly, drive technology enabled rationalization of the country’s tax infrastructure. The former will bring employment and self-employment opportunities for the youth through digital initiatives of Start-ups and MSMEs.
The latter will enable businesses to thrive in a simplified indirect- tax compliance regime powered by new technologies like hyper automation.
This will also ensure that the funds collected through GST are used efficiently and help in generating economic growth in this financial year. It is important to have a set framework and policy for GST compliance for all businesses in India, let us see how the government addresses this.”
Vishal Gupta, Co-Founder Brands2Life:
The startups and MSMEs are looking for some measures to improve the credit facilities and accessibility of funds that can mobilize the growth and further support the sector to revive from Covid. Also, the Production Linked Incentive (PLI) scheme needs a stronger framework that will further strengthen the Atma Nirbhar Bharat initiative.
As technology-led developments are taking place at a faster pace the MSMEs sector needs more encouragement from the government for its adoption.
More Entrepreneurship and Incubation programs should be considered in the priority list of the budget that may create Silicon Valley in India. 2021 is the time when the entire world is adopting new SOPs and this budget should set the launchpad for making India the global leader in this decade.
Amit Gupta CEO and Co-founder at Rapyder Cloud Solutions:
“The unprecedented Covid-19 pandemic has; without doubt; adversely impacted the world economy at large. Almost every industry has borne the brunt and MSMEs are severely affected with many closing down, probably permanently.
However, the IT & ITeS sector has seen a spike in growth across some industry verticals in the wake of the pandemic. Sectors such as EdTech, FinTech, HealthTech, HRTech, amongst others, have seen significant boosts. This will continue to fuel the growth of Cloud-Tech, AI-based, and other new-age technologies across business domains.
Knowing well that MSMEs are the biggest growth drivers to the economy and the second-largest sector after agriculture, Government should extend credit facilities for them and provide means for new-age technology adoption.
Rigid regulatory compliance and tax burdens should be revised, which can provide the impetus for growth and expansion. This will increase hiring and businesses can largely contribute to the GDP.
Revised tax policies, a less complex GST structure, and relevant policies that provide thrust for digital innovation can incentivize home-grown start-ups and brands. Such a solution can help MSMEs to operate in a more level-playing field which has MNCs and other established players.”
Pronam Chatterjee CEO, BluePi Consulting Pvt. Ltd:
“Retail industry came to a virtual standstill during the pandemic and was one of the worst-hit sectors. The cascading effects impacted the entire value chain that serves the industry.
The festive season has shown signs of recovery with major retailers recuperating to around 90% of pre-covid sales. But the recovery is still nascent and not strong enough to carry on without support.
A few things that we expect from the budget are measures to improve the disposable income in the short term, by reducing the tax burden and thereby spurring demand. The supply side of the value chain also needs to be supported by easing retailers’ access to capital.
Ease of doing business and access to capital should be the focus area for the retail sector in this budget. MSME does not cover the retail trading that constitutes a bulk of retailers; if they are not manufacturing. On the other hand, the garment manufacturers are considered MSME, but without a special package that assists them with working capital, they would also be left high and dry.
So we expect the government to broaden the MSME umbrella and announce special packaged for retailers under MSME so that they can tide over these challenging times.”