The Centre has allocated ₹3,794 crore for medium, small and micro enterprises (MSME) sector towards credit support, capital and interest subsidy as well as to spur innovation, said Arun Jaitley, Finance Minister.
Presenting the Union Budget 2018-19 on Thursday, Mr. Jaitley also said the government would soon announce measures to address non-performing assets and stressed accounts of MSMEs. “This will enable larger financing of MSMEs and also considerably ease cash flow challenges faced by them,” he said.
In a bid to reduce tax burden on MSMEs and help generate more employment, he proposed to extend the benefit of reduced corporate tax rate of 25% to companies which had reported turnover up to ₹250 crore during the financial year 2016-17. “This will benefit the entire class of MSMEs, which accounts for almost 99% of companies filing their tax returns. The estimate of revenue forgone due to this measure is ₹7,000 crore during 2018-19,” he said.
The lower corporate income tax rate for 99% of the companies would leave them with higher investible surplus which, in turn, would create more jobs, he said.
Mr. Jaitley said a massive formalisation of the businesses of MSMEs was taking place after demonetisation and introduction of Goods and Services Tax. “This is generating enormous financial information database of MSMEs’ businesses and finances. This big data base will be used for improving financing of MSMEs’ capital requirement, including working capital,” he said.
Besides, the Minister proposed to set a target of ₹3 lakh crore for lending under MUDRA (Micro Units Development and Refinance Agency) for 2018-19.
Online loan sanctioning facility for MSMEs would be revamped for prompt decision-making by banks, he said. There is also a proposal to on-board public sector banks and corporates on Trade Electronic Receivable Discounting System (TReDS) platform and link it to Goods and Services Tax Network (GSTN). According to the RBI, the objective of the TReDS is to facilitate financing of invoices/bills of MSMEs drawn on corporate buyers by way of discounting by financiers.
An industry-friendly Defence Production Policy 2018 would be unveiled to promote domestic production by firms, the Budget said. R.Narayan, CEO, Power2SME, said linking TReDS with GSTN would help MSMEs with better management of working capital and faster discounting of the bills.
