The Union government explained in detail the incentives being offered to encourage MSME entrepreneurs mainly women and those belonging to the marginalised sections after recognising that the sector is the largest employer after agriculture.
MSME sector contributes 31 per cent of country’s GDP, 33 per cent of the annual manufactured output and 45 per cent of annual exports and provide jobs to over 110 million through 50 million enterprises.
Details regarding the incentives offered to give further push to MSMEs were discussed at MSME workshop organised here recently by Shakti-Women Entrepreneurs Forum in association with SBI.
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Earlier, MP K. Haribabu and Symbiosys Technologies CEO O. Naresh Kumar urged Union MSME Minister Kalraj Mishra to lower taxes for small entrepreneurs. They requested him to slash income tax for micro, and small and medium units with 17 per cent and bank lending rate to six per cent. The Minister was also requested to modify the rule regarding payment of service tax only after payment is received from the clients.
Admitting that availability of easy credit was one of the major hurdles for growth of MSMEs, Mr. Mishra said the Ministry was implementing Credit Guarantee Trust Fund Scheme for MSME (CGTMSE) in a big way.
In his New Year address, Prime Minister Narendra Modi announced that the government would underwrite loans given by the banks to small businesses through a trust.
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The Union Cabinet cleared the package on January 18. The package includes augmentation of corpus of trust from ₹2,500 crore to ₹7,000 crore and increase coverage of loans covered under credit guarantee scheme from ₹1 crore to ₹2 crore. The scheme will be applicable loans given by non-banking financial companies (NBFC).
Mr. Mishra said the initiatives would fetch several benefits including lowering the level of leverage, improving sustainability of the fund, enabling the trust
To enhance quantum of credit guarantee to larger number of units, improving financial management and limiting the unfunded contingent liabilities.
The banks have been told to raise the credit limit for small industry from 20 per cent of turnover to 25 per cent. They are also told to hike working capital loans from 20 to 30 per cent of turnover for those enterprises who transact digitally. Income of businesses with a turnover of ₹2 crore will be calculated at six per cent instead of eight per cent on turnover for digital transactions as part of Digital India drive.