Proposed measures
Recently, Union Minister for MSMEs Jitan Ram Manjhi said six pillars were identified as focus areas for the growth of the MSME sector —
formalisation and access to credit,
increased access to market and e-commerce adoption,
higher productivity through modern technology,
enhanced skill levels and digitalisation in the service sector,
support to Khadi, Village and Coir industry to globalise them,
empowerment of women and artisans through enterprise creation.
Reasons to Support MSMEs
India now aiming to reach $2 trillion by FY30, which requires a CAGR of 14.4%.
This is a challenge in the current geopolitical situation but within the realm of reach.
It requires supporting exporters and the MSME sector by providing an enabling and supportive ecosystem.
The importance of bolstering MSMEs is more important in the current situation as the sector is the backbone of the Indian economy and a key employment generator.
Proposals for MSME Support
For this sector to sustain and grow in the current challenging situation, one strong demand by the MSMEs is that the non-performing asset (NPA) timeline be extended to 180 days from 90 days.
It will provide relief to the sector as many MSMEs are struggling because of this.
The Credit Guarantee Scheme for micro and small enterprises in the manufacturing sector must also be revamped.
The Interest Equalisation Scheme emphatically supports exports.
This scheme may be extended for a period of five years.
Coming to the rise in interest rates consequent to the increase in repo rate from 4.4% to 6.5% in the last two years, the subvention rates may be restored from 3% to 5% for manufacturers in MSMEs and from 2% to 3% for all in respect of 410 tariff lines
For the textile and garment sector, which is dominated by MSMEs, and the Remission of Duties and Taxes on Exported Products [RoDTEP] and Rebate of State and Central Taxes and Levies[ROSCTL] schemes should be extended for another five years for the sector.
The Budget must consider reintroducing the Emergency Credit Line Guarantee Scheme for MSME exporters for another two years.
This supported most MSME units with their exports
The timeline for payments to MSME job work must be extended to 120 days from the current 45 days as the RBI permits a time limit of 180 days for the realisation of export proceeds
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