Budget 2024-25: Major Announcements For MSME

On July 23, the Union Budget for 2024-25 was presented in the Lok Sabha by Finance Minister Nirmala Sitharaman.

Here are major announcements for the MSMEs

Support for promotion of MSMEs

This budget provides special attention to MSMEs and manufacturing, particularly labour-intensive manufacturing. The Finance Minster has formulated a package covering financing, regulatory changes and technology support for MSMEs to help them grow and also compete globally, as per interim budget.

New assessment model for MSME credit

Public sector banks will build their in-house capability to assess MSMEs for credit, instead of relying on external assessment. They will also take a lead in developing or getting developed a new credit assessment model, based on the scoring of digital footprints of MSMEs in the economy. This is expected to be a significant improvement over the traditional assessment of credit eligibility based only on asset or turnover criteria. That will also cover MSMEs without a formal accounting system.

Credit Support to MSMEs during Stress Period

A new mechanism for facilitating continuation of bank credit to MSMEs during their stress period. While being in the 'special mention account' (SMA) stage for reasons beyond their control, MSMEs need credit to continue their business and to avoid getting into the NPA stage. Credit availability will be supported through a guarantee from a government promoted fund.

Mudra Loans

The limit of Mudra loans will be enhanced to ₹ 20 lakh from the current ₹ 10 lakh for those entrepreneurs who have availed and successfully repaid previous loans under the 'Tarun' category.

Enhanced scope for mandatory onboarding in TReDS

For facilitating MSMEs to unlock their working capital by converting their trade receivables into cash, the Finance Minister has proposed to reduce the turnover threshold of buyers for mandatory onboarding on the TReDS platform from Rs. 500 crore to Rs. 250 crore. This measure will bring 22 more CPSEs and 7000 more companies onto the platform. Medium enterprises will also be included in the scope of the suppliers.

SIDBI branches in MSME clusters

SIDBI will open new branches to expand its reach to serve all major MSME clusters within 3 years, and provide direct credit to them. With the opening of 24 such branches this year, the service coverage will expand to 168 out of 242 major clusters.

MSME Units for Food Irradiation, Quality & Safety Testing

Financial support for setting up of 50 multi-product food irradiation units in the MSME sector will be provided. Setting up of 100 food quality and safety testing labs with NABL accreditation will be facilitated.

E-Commerce Export Hubs

To enable MSMEs and traditional artisans to sell their products in international markets, E-Commerce Export Hubs will be set up in public- private-partnership (PPP) mode . These hubs, under a seamless regulatory and logistic framework, will facilitate trade and export related services under one roof.