In the Union Budget 2024, the Narendra Modi-led NDA government provided special attention to the Micro, Small and Medium Enterprises (MSMEs), and manufacturing, particularly the labour-intensive manufacturing.
This was evident from the budget document itself which highlighted the package that covers financing, regulatory changes and technology support for MSMEs to help them grow and also compete globally, as mentioned in the Interim Budget.
Notably, the MSMEs were also a part of the four major themes in this year’s Budget.
In her Budget speech at the Parliament, the Finance Minister Nirmala Sitharaman said in this Budget, we particularly focus on employment, skilling, MSMEs and the middle class.
Here are the eight proposed measures in support of MSMEs in this Union Budget:
New assessment model for MSME credit by PSBs
Public Sector Banks (PSBs) will build their in-house capability to assess MSMEs for credit, instead of relying on external assessment.
They will also take a lead in developing or getting developed a new credit assessment model, based on the scoring of digital footprints of MSMEs in the economy.
“This is expected to be a significant improvement over the traditional assessment of credit eligibility based only on asset or turnover criteria. That will also cover MSMEs without a formal accounting system,” stated the Finance Minister.
MUDRA loans enhanced to Rs 20 Lakh
It has been proposed in the Union Budget to enhance the limit of Mudra loans to Rs 20 lakh from the current Rs 10 lakh for those entrepreneurs who have availed and successfully repaid previous loans under the ‘Tarun’ category.
Credit support during stress period
A new mechanism has been proposed for facilitating continuation of bank credit to MSMEs during their stress period.
Notably, the credit availability will be supported through a guarantee from a government promoted fund.
It is to be noted that while being in the ‘special mention account’ (SMA) stage for reasons beyond their control, MSMEs need credit to continue their business and to avoid getting into the Non-Performing Assets (NPA) stage.
Credit Guarantee Scheme in Manufacturing Sector
A credit guarantee scheme has been proposed for facilitating term loans to MSMEs for purchase of machinery and equipment without collateral or third-party guarantee.
The Finance Minister said that the scheme will operate on pooling of credit risks of such MSMEs.
A separately constituted self-financing guarantee fund will provide, to each applicant, guarantee cover up to ₹100 crore, while the loan amount may be larger.
The borrower will have to provide an upfront guarantee fee and an annual guarantee fee on the reducing loan balance.
New SIDBI branches In MSME clusters
SIDBI will open new branches to expand its reach to serve all major MSME clusters within 3 years, and provide direct credit to them. With the opening of 24 such branches this year, the service coverage will expand to 168 out of 242 major clusters.
New multi-product food irradiation units in MSME sector
The Union Budget also proposed financial support for setting up of 50 multi-product food irradiation units in the MSME sector.
It also announced setting up of 100 food quality and safety testing labs with NABL accreditation will be facilitated.
Turnover threshold for buyers halved for mandatory onboarding in TReDS
The turnover threshold of buyers for mandatory onboarding on the TReDS platform has been halved from Rs 500 crore to Rs 250 crore.
Finance Minsiter said this measure will bring 22 more Central Public Sector Enterprises (CPSEs) and 7,000 more companies onto the platform.
Medium enterprises will also be included in the scope of the suppliers.
E-commerce export hubs
Finance Minister proposed that E-Commerce Export Hubs will be set up in public-private-partnership (PPP) mode.
These hubs, under a seamless regulatory and logistic framework, will facilitate trade and export related services under one roof, she stated.
