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| Photo Credit: V. Sreenivasa Murthy
In her seventh budget speech and the first Union Budget presented by the new NDA government, Finance Minister Nirmala Sitharaman announced a bevy of measures aimed at boosting the micro, small and medium enterprise (MSME) sector.
Click here for the Union Budget 2024 updates, highlights
Saying that the Budget provided special attention to MSMEs and labour-intensive manufacturing, Ms. Sitharaman said that the government has formulated a package covering financial, technological support to MSMEs to spur their growth.
She announced that a credit guarantee scheme to facilitate term loans for machinery without provision of a collateral or third-party guarantee will be introduced. A separately constituted self-financing guarantee fund will provide a guarantee cover up to Rs. 100 crore for each borrower, while the loan amount may be higher.
The Budget also proposes a new assessment model for MSME credit by public sector banks which will not rely on external assessment. This will be based on the digital footprint of MSMEs in the economy, rather than only on assets and turnover criteria traditionally used, the Minister said.
The Budget also provides for credit support to MSMEs during a stress period, through a new mechanism, while being a special mention account for reasons beyond their control, to avoid such enterprises getting into the NPA stage.
Mudra loan limit will be enhanced to Rs. 20 lakh from the current Rs. 10 lakh for those who have availed and successfully repaid loans previously taken under the Tarun category.
Further, 24 new SIDBI branches in MSME clusters are also to be opened within three years to allow for more credit, with the coverage being expanded to 168 clusters.
Further, e-commerce export hubs to enable MSMEs and traditional artisans to make their make in international markets, will be set up in a PPP mode with a seamless regulatory framework, so that trade can will be facilitated under one roof.
The government will reduce the turnover threshold of MSME buyers for mandatory onboarding on TReDs platform from Rs 500 crore to Rs 250 crore. TReDS is an online platform to help MSMEs
