Union Finance Minister Nirmala Sitharaman on Tuesday gave a much needed boost to the micro, small and medium enterprises (MSMEs). In her budget speech, Sitharaman said that the limit for MUDRA loans for MSMEs has been increased from Rs 10 lakh to Rs 20 lakh for those who have availed the loans before and successfully repaid.
Providing a further fillip to the sector, Sitharaman announced a credit guarantee scheme for MSMEs in the manufacturing sector. The NDA 3.0 government has provided MSMEs in the manufacturing sector with a guarantee cover of upto Rs 100 crore.
Under this credit guarantee scheme, MSMEs can take loans without having to give any collateral or third-party guarantee. She also said that term loans will be facilitated for the purchase of machinery.
On credit guarantee schemes for MSMEs in manufacturing, Sitharaman said, "To facilitate term loans for MSMEs for the purchase of machinery and equipment without collateral and guarantee, a new scheme will be introduced. This guarantee fund will provide guarantees of up to Rs 100 crore."
The Finance Minister also announced a new arrangement to facilitate the continuation of bank credit to borrowers during their period of stress. Furthermore, a package to finance technology support for MSMEs has also been formulated, as per Sitharaman.
Commenting on the credit guarantee scheme, Abhishek Gupta, Founder and Managing Partner at Pierag LLP Consulting said MSMEs should take this opportunity to invest in top-notch machinery and equipment. "Overall, this credit guarantee scheme is a promising development for MSME sector, and we look forward to witnessing its positive impact on the growth and sustainability of businesses across the country," Gupta said.
Financial support for 50 multi-product food irradiation units in the MSME sector was also announced. Earlier in her speech, Sitharaman said that the Centre will continue to focus on the MSME sector apart from employment, skilling and middle class.
She added that the Union Budget 2024 in line with the Modi government's Viksit Bharat vision. Moreover, the Finance Minister said that the turnover threshold of buyers for mandatory onboarding on TReDS platform will be reduced from Rs 500 crore to Rs 250 crore. TReDs is an online platform meant to help MSMEs.
Nirmala Sitharaman mentioned that e-commerce hubs will be set up in the public private partnership (PPP) mode to enable MSMEs and traditional artisans to sell their products in the international markets.
She also provided Rs 2.66 lakh crore for rural development and said that SIDBI will open 24 new branches to serve MSME clusters. The government will also launch a saturation drive under Pradhan Mantri Janjati Adivasi Nyaya Maha Abhiyan (PM JANMAN).
Commenting on the Budget 2024-25 announcements for the MSME sector, Sameer Jain, Managing Director at Primus Partners said, “MSMEs consume approximately 50% of nation's power needs and generate over 75% of GHG emissions. While the budget has committed support to MSMEs to grow and compete globally, additional support is required for the greening of the MSME sector, including easier access to climate financing. It will be interesting to see the details of the provisions for uses of Credit Guarantee Schemes esp. for Green projects.”
Deepthi Alexander, Partner, Indirect Tax, BDO India said: “The Budget has emphasized on the importance of manufacturing and services. The introduction of the Credit guarantee scheme for MSMEs, enhancement of MUDRA loans and the introduction of E-commerce hubs under the PPP model will not only boost revenue in these sectors but also fuel employment and provide for higher wage opportunities.”