Budget 2024: MSMEs Get Booster Shot, MUDRA Loan Cap Increased

Union Finance Minister Nirmala Sitharaman announced key measures to boost the micro, small, and medium enterprises (MSMEs) sector in her budget speech. The limit for MUDRA loans for MSMEs has been increased from Rs 10 lakh to Rs 20 lakh for those who have previously availed and successfully repaid these loans.

Sitharaman also introduced a credit guarantee scheme specifically for MSMEs in the manufacturing sector. This scheme provides a guarantee cover of up to Rs 100 crore, allowing MSMEs to secure loans without the need for collateral or third-party guarantees. The scheme facilitates term loans for purchasing machinery and equipment, which will be backed by the newly established guarantee fund.

Sitharaman stated, "To facilitate term loans for MSMEs for the purchase of machinery and equipment without collateral and guarantee, a new scheme will be introduced. This guarantee fund will provide guarantees of up to Rs 100 crore."

Additionally, a new arrangement will ensure the continuation of bank credit to borrowers during periods of stress.

A package to finance technology support for MSMEs has also been formulated. Abhishek Gupta, Founder and Managing Partner at Pierag LLP Consulting, emphasized the importance of this opportunity for MSMEs to invest in top-notch machinery and equipment, stating, "Overall, this credit guarantee scheme is a promising development for the MSME sector, and we look forward to witnessing its positive impact on the growth and sustainability of businesses across the country."

Financial support for 50 multi-product food irradiation units in the MSME sector was also announced.

Sitharaman highlighted the government's continued focus on the MSME sector, along with employment, skilling, and support for the middle class. The turnover threshold for mandatory onboarding on the TReDS platform will be reduced from Rs 500 crore to Rs 250 crore, facilitating MSMEs.

Furthermore, e-commerce hubs will be set up in public-private partnership (PPP) mode to enable MSMEs and traditional artisans to sell their products internationally. Sitharaman allocated Rs 2.66 lakh crore for rural development and announced that SIDBI will open 24 new branches to serve MSME clusters. A saturation drive under the Pradhan Mantri Janjati Adivasi Nyaya Maha Abhiyan (PM JANMAN) will also be launched.

Commenting on the budget announcements, Sameer Jain, Managing Director at Primus Partners, highlighted the need for additional support for greening the MSME sector and easier access to climate financing.

Deepthi Alexander, Partner, Indirect Tax, BDO India, noted that the budget's focus on manufacturing and services, along with the introduction of credit guarantee schemes and e-commerce hubs, will boost revenue, employment, and wage opportunities in these sectors.