In anticipation of the interim budget in an election year, slated to be presented by Finance Minister Nirmala Sitharaman on February 1, MSME stakeholders are urging the government to address critical issues related to working capital challenges. Timely access to credit and efficient working capital flow remains a persistent concern for small business owners, prompting calls for targeted interventions.
Key MSME Recommendations:
- Addressing Delayed Payments: Stakeholders emphasize the crucial need to tackle delayed payments, a pressing issue for the MSME sector that impacts operational efficiency and resonates throughout the economic spectrum.
- Revision in GST Registration Threshold: The MSME sector is hopeful for a revision in the minimum GST registration revenue threshold to alleviate the financial burden on small businesses.
- Corporate Tax Rate Decrease: Calls for a decrease in corporate tax rates to stimulate growth and provide relief to MSMEs.
- Tailored Tax Incentives: Advocacy for tailored tax incentives specifically designed for MSMEs to unlock growth opportunities.
Additional Focus Areas:
- Access to Finance: A strategic focus on enhancing access to finance for MSMEs.
- Digital Transformation: Driving digital transformation within the MSME sector.
- Regulatory Burden Alleviation: Measures to alleviate regulatory burdens for small businesses.
Trade Credit Insurance and TReDS:
- Allocation of budgetary support for insurers to quickly adopt the Trade Receivables Discounting System (TReDS).
- Active operations of the Credit Guarantee Fund Scheme for Factoring (CGFSF) on TReDS to enhance coverage for government-backed schemes.
Expectations Beyond Fiscal Measures:
- Formalizing the Sector: Extending benefits of Udyam to all MSMEs through fiscal measures to enhance financial inclusion.
- Exhibition Incentives Marketing: Doubling the budget for exhibition initiatives to cope with rising expenses in the MSME sector.
- Machinery Incentives: Calling for an enhanced tax reduction scheme to address the lack of incentives in machinery.
Labor Front Challenges:
- Addressing challenges on the labor front, such as the absence of taxation posing challenges for companies focusing on labor incentives.
