MSMEs can expect a number of enabling initiatives in Budget 2016


The significance of Micro, Small & Medium Enterprises (MSMEs) to India’s economic growth and prosperity is well established.  They provide the critical depth to the manufacturing and service sectors, foster entrepreneurship and generate substantial employment.  Close to 45 per cent of the total manufacturing output and 40 per cent of the country’s exports is contributed […]


Final Budget LogoThe significance of Micro, Small & Medium Enterprises (MSMEs) to India’s economic growth and prosperity is well established.  They provide the critical depth to the manufacturing and service sectors, foster entrepreneurship and generate substantial employment.  Close to 45 per cent of the total manufacturing output and 40 per cent of the country’s exports is contributed by India’s SME sector. The sector is the largest generator of employment after agriculture.

Finance Minister Arun Jaitley is said to be considering a number of proposals to provide boost to MSME businesses in his upcoming Union Budget 2016-17.

These proposals include providing monetary incentives under Skill India to small-scale entrepreneurs to help them impart specific training to unskilled labour and a flush of capital into the Technology Acquisition and Development Fund (TADF), meant to help business to acquire the requisite machinery and technology to expand their operations.

TADF set up by Commerce Minister Nirmala Sitharaman in November 2015,  aims to facilitate acquisition of clean, green and energy-efficient technologies, customised products, specialised services, patents, and industrial designs available in the market — in India or globally — by MSME businesses. It is expected to see an allocation, of which there has been none yet.

Earlier this month, the Cabinet approved the Rs 3,000-crore Mudra Credit Guarantee Fund (CGF) that will act as hedge against default of Rs 50,000 to Rs 10-lakh loan extended to small entrepreneurs and the Rs 5,000-crore Standup India CGF for guaranteeing Rs 10-lakh to Rs 1-crore loans to be provided to 250,000 SC/ST and women.

With an enhanced focus on job creation, there has to be enough and more importance to the MSME sector, whether technology start-ups or the more traditional businesses, as employment generators.

At the launch of Startup India on January 16, Jaitley had already pledged to ease regulations to encourage start-up businesses and to lower long-term capital gains tax for new ventures in the upcoming Budget.

Purvi Shukla

A Journalist, Foodie, Traveller, Photographer. Purvi is an avid learner of Business and SME Sector. She can be reached on purvi.shukla@smepost.com

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