India’s micro, small, and medium enterprises (MSME) sector, ravaged by the pandemic, is hopeful that the upcoming Union Budget will provide some relief, similar to the Emergency Credit Line Guarantee Scheme (ECLGS), which provided relief during the height of the pandemic.
ECLGS is a program that assists small and medium-sized enterprises (SMEs) in overcoming challenging economic conditions and satisfying their ever-increasing immediate requirements for financial assistance.
What are the MSMEs expecting from the Union Budget?
Following the epidemic’s beginning, raw material supply interruptions and increasing commodity prices have afflicted (MSMEs), and the Russia-Ukraine war has only worsened matters. Certainly, the Ebitda (earnings before interest, taxes, depreciation, and amortization) margin has been impacted.
Because of their essential role in the nation’s industrial ecosystem, micro, small, and medium-sized businesses are the primary source of new employment. Although small and medium-sized businesses have recovered from the slowdown caused by Covid, micro units have yet to return to their levels before the recession.
According to the definition, a unit with an investment of 5 crores is referred to as a micro-unit, while a unit with an investment of 10 crores is referred to as a small unit. Businesses with assets of 20 crore rupees are identified as small, while those with a capital of 50 crore rupees are classified as medium-scale.
Sandeep Belsare, president of the Pimpri-Chinchwad Small and Medium Scale Industries Association, expressed his hope that the budget would ensure a mechanism to control the wide variations in steel and iron prices. He said this because the prices of these two metals have fluctuated widely in recent years. The sector as a whole has witnessed significant shifts in the cost of raw materials, which has harmed its profit margins.
Introducing a paradigm of long-term sustainability for MSMEs:
Because micro, small, and medium-sized enterprises (MSMEs) require more foreign direct investment (FDI) to help them expand economically, new regulations must be implemented to support this.
Many micro, small, and medium-sized firms (MSMEs) would benefit from having their income tax rates decreased in an analogous to how the rates for corporations have been lowered.
Because the application procedure is so lengthy, the new TReDS (Trade Receivables Discounting System) has only been available to a limited number of micro, small, and medium-sized companies (MSMEs). Consequently, there is optimism that the TReDS facility will soon be increased in size to accommodate a more significant number of MSMEs and to incorporate more concessions.
The flow of money into the sector of MSMEs is halted whenever there is a delay in settlement of payments; thus, there must be a means to settle payments more quickly and make it simpler for MSMEs to get lines of credit.
