November 25, 2024 08:14 (IST)
Follow us:
facebook-white sharing button
twitter-white sharing button
instagram-white sharing button
youtube-white sharing button
Maharashtra Elections: Mahayuti's newly-elected MLAs to select CM in key meeting on Monday | Mahayuti routs MVA in Maharashtra, INDIA retains Jharkhand; Priyanka's triumphant poll debut | How can Mahayuti win over 200 seats? Sanjay Raut cries foul over Maharashtra mandate | 'Third World War has begun:' Ex-Ukraine military commander-in-chief Valery Zaluzhny | UK-India Free Trade Agreement negotiations to resume in early 2024
UnionBudget2024: FM proposes eight new measures to support MSMEs
UnionBudget2024
Photo Courtesy: PIB

UnionBudget2024: FM proposes eight new measures to support MSMEs

| @indiablooms | 23 Jul 2024, 01:40 pm

With an eye on employment generation and to boost the manufacturing sector, Union Finance Minister Nirmala Sitharaman announced special measures for the MSME sector.

“This budget provides special attention to MSMEs and manufacturing, particularly labour-intensive manufacturing,” stated Nirmala Sitharaman while presenting Union Budget 2024-25, in Parliament on Tuesday.

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.  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, 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 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,  Sitharaman proposed to reduce the turnover threshold of buyers for mandatory onboarding 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

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.

Support Our Journalism

We cannot do without you.. your contribution supports unbiased journalism

IBNS is not driven by any ism- not wokeism, not racism, not skewed secularism, not hyper right-wing or left liberal ideals, nor by any hardline religious beliefs or hyper nationalism. We want to serve you good old objective news, as they are. We do not judge or preach. We let people decide for themselves. We only try to present factual and well-sourced news.

Support objective journalism for a small contribution.