MSME Sector Proposes Recommendations to Sitharaman Ahead of Union Budget 2024-25

On Friday, representatives from the Micro, Small and Medium Enterprises (MSME) sector presented a series of recommendations to Finance Minister Nirmala Sitharaman, aimed at boosting the sector ahead of the Union Budget 2024-25. The meeting, which was the fifth pre-Budget consultation, focused on gathering insights and suggestions for the forthcoming General Budget. The finance ministry highlighted this engagement in a social media post, noting the anticipation for the full Budget presentation in Parliament next month.

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The discussions brought to light various challenges faced by the MSME sector, including issues related to obtaining institutional financing, adherence to the Reserve Bank of India's (RBI) norms on Non-Performing Assets (NPA) classification, and the enforcement of a 45-day payment rule. The Federation of Indian Micro and Small & Medium Enterprises (FISME) put forth a 10-point recommendation list that included proposals for NPA classification mechanisms, disaster support for MSMEs involved in international trade, and the implementation of insurance surety as an alternative to bank guarantees.

Om Prakash Gupta, General Secretary of Laghu Udyog Bharati, shared insights from the nearly two-and-a-half-hour meeting, revealing that his association offered eight suggestions focused on capacity building within the MSME sector. Gupta emphasized the importance of adhering to the 45-day payment rule under Section 43 bh of the Income Tax Act, highlighting how delayed payments adversely affect smaller businesses.

Sanjay Goenka, former vice-president of Bihar Industries Association, and V P Vaishnav, President of Rajkot Chamber of Commerce, echoed the sentiment that the meeting was productive. They noted that 14 MSME associations and chambers of commerce participated in the discussions which also covered incentives for the MSME sector. Subodh Jindal, President of All India Food Processors Association, suggested an increase in the depreciation rate for plant and equipment in the Income Tax Act from 15 per cent to 25 per cent.

Murali Krishna, President of Federation of Andhra Pradesh Small and Medium Industries Association, called for tax exemptions for MSMEs on specific projects like the Polavaram project and Amaravati Capital projects. In a separate consultation with farm organisations and experts earlier in the day, there were calls for increased investment in agricultural research, rationalization of fertiliser subsidies, and infrastructure development to enhance resilience against climate change. Stakeholders advocated for a significant increase in budget allocation for the Indian Council of Agricultural Research (ICAR) from Rs 9,500 crore to Rs 20,000 crore.

The consultation meetings were part of a broader effort to incorporate feedback from various sectors into the upcoming budget. Union Minister of State for Finance Pankaj Chaudhary and other senior officials also attended these discussions, underscoring the government's commitment to addressing the needs and challenges faced by both the agricultural and MSME sectors.