In a bid to invigorate the micro, small, and medium enterprises (MSME) sector, Finance Minister Nirmala Sitharaman unveiled a series of significant measures during her presentation of the Union Budget 2024-25 on Tuesday. The initiatives aim to support MSMEs, enhance their global competitiveness, and drive economic growth.
Speaking before Parliament, Sitharaman highlighted the government’s commitment to the MSME sector, which she described as a priority area. “This budget provides special attention to MSMEs and manufacturing. A separate guarantee fund will provide Rs 100 crore to MSMEs,” she stated. This fund is designed to offer financial assistance through term loans for the purchase of machinery and equipment, eliminating the need for collateral or third-party guarantees.
The Credit Guarantee scheme, valued at Rs 100 crore, will support MSMEs by pooling credit risks associated with these businesses. “A separately constituted self-financing guarantee fund will provide, to each applicant, guarantee cover up to Rs 100 crore, while the loan amount may be larger,” Sitharaman explained. This approach will allow public sector banks to build in-house capabilities to assess MSMEs for credit, moving away from reliance on external evaluations.
Sitharaman also emphasized that the new mechanism will ensure the continuity of bank credit to MSMEs, even if they are in the Special Mention Account (SMA) stage, by offering government-backed guarantees.
The Finance Minister’s speech outlined broader goals for the budget, including measures to advance manufacturing, services, urban development, energy security, and infrastructure. Notably, the MUDRA loan limit in the Tarun category has been doubled from Rs 10 lakh to Rs 20 lakh, which is expected to provide greater financial support to small businesses.
In a bid to streamline trade receivables, Sitharaman proposed reducing the turnover threshold for mandatory onboarding on the Trade Receivables Electronic Discounting System (TReDS) platform from Rs 500 crore to Rs 250 crore. This adjustment will extend the platform’s reach to include 22 more Central Public Sector Enterprises (CPSEs) and 7,000 additional companies, incorporating medium enterprises into the supplier network.
The government plans to expand the reach of the Small Industrial Development Bank of India (SIDBI) by establishing new branches to serve MSME clusters. Over the next three years, SIDBI branches will cover 168 out of a total of 242 clusters.
Additionally, the budget outlines the development of e-commerce export hubs through public-private partnerships (PPP). These hubs will facilitate traditional artisans and MSMEs in launching their products in international markets, supported by a seamless regulatory and logistical framework.
To bolster food safety and quality, the budget allocates financial support for establishing 50 multi-product food irradiation units and 100 food quality and safety testing labs with NABL accreditation.
The government has also sanctioned the creation of 12 industrial parks under the National Industrial Corridor Programme and will facilitate rental housing for industrial workers through PPPs. Sitharaman announced plans to develop “plug and play” industrial parks in or near 100 cities, leveraging town planning schemes to enhance infrastructure and attract investment.
These measures reflect the government’s ongoing commitment to fostering the growth of MSMEs, enhancing their global competitiveness, and contributing to the overall economic development of India.
Also Read: Budget 2024: Nirmala Sitharaman Unveils Comprehensive Plan for Inclusive Development
