Govt allocates Rs 20,000 cr to boost SMEs via Mudra Bank

The Government’s ‘Make in India’ initiative and its thrust on expanding the share of manufacturing to India’s goss domestic product (GDP) has the potential to transform the fortunes of the micro, small and medium enterprises (MSMEs) in the country. Also with focus on Digital India and Swachh Bharat Abhiyan, the sector will get the needed impetus.

Expectations from the Budget 2015-16

•    Some encouragement from the government in the terms of tax Standard Operating   Procedures (SOPs) to motivate them to rise in the international arena.•    Availability of cheap credit, use of technology and a stringent policy framework.•    Measures to completely abolish the CST should be looked at in the upcoming Budget.•    The Center should look at simplifying the service tax rate.•    A single registration for payment of VAT and other taxes.•    A clear road map for implementation of GST if it comes through.•    To ensure ease of doing business - The SMEs demand minimal regulation, compliance and removal of paperwork hurdles.•    To ensure adequate supply of coal to power plants.•    A boost under Narendra Modi government’s ‘Make in India’ campaign that aims at job creation and investment promotion in key sectors such as automobiles, electronics, mining, pharma among others.

State of the Industry

Amidst India’s evolving economic environment, MSMEs have been advocating revision of the basic structure of definition of MSMEs to provide for a higher capital ceiling.MSME which contribute to about eight percent of India’s GDP play a vital role in the country’s growth. In India MSMEs contributing 40 percent of the country’s total export. MSMEs provide employment to more than 60 million people and are producing more than 8000 quality products for the international and Indian market.

Highlights of Budget 2014

•    Introduction of GST to bring down net tax incurred on goods and services, but to increase the overall tax collection and also push economic growth up to 2%.•    All Central Government Departments and Ministries to integrate their services with the eBiz platform on priority.•    To encourage entrepreneurship in India, Jaitley has allocated a whooping Rs 10,000 crore fund, which will act as a catalyst to attract private investors by way of providing equity and soft loans, bringing much relief to the MSME sector across the country. •    Committee to examine the financial architecture for MSME Sector, remove bottlenecks and create new rules and structures to be set up and give concrete suggestions.•    Entrepreneur friendly legal bankruptcy framework will be developed for SMEs to enable easy exit.•    A nationwide “District level Incubation and Accelerator Programme” to be taken up for incubation of new ideas and necessary support for accelerating entrepreneurship.