FINANCE MINISTER PROPOSES 8 NEW MEASURES IN SUPPORT FOR PROMOTION OF MSMEs in UNION BUDGET 2024-25
“This budget provides special attention to MSMEs and
manufacturing, particularly labour-intensive manufacturing,” stated Union
Minister for Finance and Corporate Affair Smt. Nirmala Sitharaman while
presenting Union Budget 2024-25, in Parliament today. The Union Finance
Minister said that the Government has formulated a 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.
The Micro,
Small and Medium Enterprises (MSMEs) are part of the four major themes in the
Budget and the Union Finance Minister proposed the following specific measures
in support of MSMEs:
CREDIT GUARANTEE SCHEME FOR MSMEs IN THE MANUFACTURING
SECTOR
The Union Finance Minister proposed a credit guarantee
scheme for facilitating term loans to MSMEs for purchase of machinery and
equipment without collateral or third-party guarantee. Smt. Sitharaman said
that the scheme will operate on pooling of credit risks of such MSMEs. Giving
more details, the Union Finance Minister said that 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.
PSBs TO DEVELOP NEW ASSESSMENT MODEL FOR MSME CREDIT
To make credit more accessible to MSMEs via a new,
independent, and in-house mechanism, Smt. Sitharaman proposed that 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 Union Finance Minister.
CREDIT SUPPORT TO MSMEs DURING STRESS PERIOD FROM A GOVT
PROMOTED FUND
The Union Finance Minister also proposed a new mechanism
for facilitating continuation of bank credit to MSMEs during their stress
period. 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 availability will be
supported through a guarantee from a government promoted fund, proposed Smt.
Sitharaman.
MUDRA LOANS ENHANCED FOR CREDIT-WORTHY ENTREPRENEURS TO
₹20 LAKH
The Finance Minister proposed to enhance the limit of
Mudra loans to ₹20 lakh from the current ₹10 lakh for those entrepreneurs who
have availed and successfully repaid previous loans under the ‘Tarun’ category.
TURNOVER THRESHOLD FOR BUYERS HALVED FOR MANDATORY
ONBOARDING IN TReDS
For facilitating MSMEs to unlock their working capital by
converting their trade receivables into cash, Smt. Sitharaman proposed to
reduce the turnover threshold of buyers for mandatory on boarding on the TReDS
platform from ₹500 crore to ₹250 crore. 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.
NEW SIDBI BRANCHES IN MSME CLUSTERS FOR EASIER AND DIRECT
CREDIT ACCESS
The Union Finance Minister proposed that 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,
Smt. Sitharaman stated.
NEW MSME UNITS FOR FOOD IRRADIATION, QUALITY & SAFETY
TESTING
Smt. Sitharaman proposed that financial support for
setting up of 50 multi-product food irradiation units in the MSME sector will
be provided. Setting up of 100 food quality and safety testing labs with NABL
accreditation will be facilitated.
E-COMMERCE EXPORT HUBS MSMEs AND TRADITIONAL ARTISANS TO
ACCESS TO INTERNATIONAL MARKETS
To enable MSMEs and traditional artisans to sell their
products in international markets, the Union 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, the Union Finance Minister
stated.
(Courtesy: PIB)
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