MSME Sector Presents Key Recommendations to Finance Minister Ahead of Union Budget 2024-25

On Friday, representatives from the Micro, Small and Medium Enterprises (MSME) sector met with Finance Minister Nirmala Sitharaman. They presented recommendations to support the sector before the Union Budget 2024-25. This meeting was the fifth pre-Budget consultation, focusing on gathering insights for the upcoming General Budget. The finance ministry shared this engagement on social media, highlighting anticipation for next month's full Budget presentation in Parliament.

The discussions highlighted several challenges faced by the MSME sector. These included difficulties in securing institutional financing, compliance with the Reserve Bank of India's (RBI) norms on Non-Performing Assets (NPA) classification, and enforcing a 45-day payment rule. The Federation of Indian Micro and Small & Medium Enterprises (FISME) proposed a 10-point recommendation list. This included suggestions for NPA classification mechanisms, disaster support for MSMEs involved in international trade, and using 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. His association offered eight suggestions focused on capacity building within the MSME sector. Gupta stressed the importance of adhering to the 45-day payment rule under Section 43 bh of the Income Tax Act. He highlighted how delayed payments negatively impact smaller businesses.

Sanjay Goenka, former vice-president of Bihar Industries Association, and V P Vaishnav, President of Rajkot Chamber of Commerce, found the meeting productive. They noted that 14 MSME associations and chambers of commerce participated in discussions covering incentives for the MSME sector. Subodh Jindal, President of All India Food Processors Association, suggested increasing 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 Polavaram and Amaravati Capital projects. Earlier that day, a separate consultation with farm organisations and experts took place. They called for increased investment in agricultural research, rationalisation 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). They suggested raising it from Rs 9,500 crore to Rs 20,000 crore. These consultation meetings are 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. This underscores the government's commitment to addressing challenges faced by both agricultural and MSME sectors.