Budget 2021: MSMEs welcome new customs duties and incentives for digitisation
In her Union Budget speech, FM Nirmala Sitharaman allocated Rs 15,700 crore to the MSME sector, besides laying a special framework of Data Analytics, Machine Learning (ML), and Artificial Intelligence (AI) to assist the sector.
“We have taken a number of steps to support the MSME sector in this Budget. I have provided Rs 15,700 crore to the sector, which is more than double of last year,” she said.
The government has committed nearly Rs 1.97 lakh crore over five years, starting this fiscal year, for Production Linked Incentive (PLI) Schemes to create manufacturing leaders for an Aatmanirbhar Bharat.
Further, to boost digital transactions, Sitharaman earmarked Rs 1,500 crore for a proposed scheme to provide financial incentives to promote digital modes of payment among MSMEs.
To boost the local textile industry and help India become one of the leading manufacturers of textiles in the world, FM Nirmala Sitharaman in Union Budget 2021 announced the establishment of seven textile parks.
Sitharaman also announced a slew of changes in customs duties in a bid to boost local manufacturing. She explained that since last year, the government is overhauling the structure of customs duties and has eliminated 80 outdated exemptions.
Here's how India's MSME sector and its stakeholders from across the country are reacting to the Union Budget 2021:
MSME sector likely to benefit - Sandip Chhettri, COO, TradeIndia
TradeIndia.com COO Sandip Chhettri
The extension in capital gains exemption by one year is a move that will help businesses recover from the brunt of the pandemic. As far as MSMEs are concerned, it is good news that the Centre has decided to double the allocation for the sector. The government now plans to set aside Rs 15,700 crore in FY22, and if this decision is implemented wisely in the coming days, the sector would definitely benefit.
Setting up textile parks a positive step - Rohan Gupta, MD, Gargee Designers
The setting up of textile parks is a positive step towards creating jobs and giving local manufacturers a boost. It will also increase exports. It is a comprehensive way of boosting the income of our skilled weavers and manufacturers. The Budget also gives a helping hand to small producers through boosting cotton and silk raw material producers as well as fabric manufacturers.
Doing business to become easier for MSMEs - Rahul Garg, CEO and Founder, Moglix
Rahul Garg, Moglix
The 2021 Union Budget takes a calibrated approach in shaping the government’s fiscal policy and responding to opportunities and challenges on our way towards being self-reliant over the long term. The outlay for the National Infrastructure Pipeline (NIP) will increase the scale and strength of India’s supply chain infrastructure.
The special framework for easy exit and duty alterations will augment the ease of doing business for MSMEs, enabling small businesses of today to become global manufacturers of tomorrow.
Budget 2021 a much-needed lifeline for MSMEs - Vaibhav Patil, Director of Finance, eZee Technosys
The MSME sector, which was battered by COVID-induced lockdowns, needed a lifeline. By increasing their threshold for capitalisation, such companies will get certain relief and exemptions provided by the government. The government will also be able to route emergency credit to this sector.
The finance minister also mentioned about minimum wages being applied to all categories of workers. However, many MSMEs might not be able to make the pay-hike mandate work without laying off employees or not hiring them in the first place. We have to wait and watch how the government implements this over a period of time.
A comprehensive, well-rounded Budget - Shyam Sunder Aggarwal, Managing Director, Bikano
Shyam Sundar Aggarwal and Manish Aggarwal
The government must be congratulated for a comprehensive Budget in what was an extremely taxing economic backdrop. Along with disinvestment, Atmanirbhar Bharat initiatives, and production-linked incentive’s (PLI) with a special focus on 13 sectors, India can generate sufficient and sustainable employment.
This would lead to stable incomes and higher purchasing power, which would, in turn, generate demand for FMCG and food products and services.
Incentivising digital payments to go a long way - Manish Patel, Founder and CEO, MSwipe
Small retailers and kiranas were instrumental in growing the share of digital payments in India and in providing easy payment solutions to their customers since the onset of COVID-19. The Budget provision of Rs 1,500 crore to incentivise digital modes of payments comes as a recognition of these efforts and will go a long way in encouraging MSMEs to switch to accepting digital payments.
The announcement has met the industry’s expectation of providing financial incentives for MSMEs to adopt digital solutions.
New custom duty structure a relief - Vinay Jain, Founder and CEO, Grafdoer
Vinay Jain, Founder and CEO, Grafdoer
The Union Budget FY 21-22 has brought a ray of hope. The new custom duty structure that has been introduced on steel products is a relief as it has reduced duties on copper from 5 percent to 2.5 percent. It has also cut duty on copper scrap from 5 percent to 2.5 percent, and exempted duty on steel scrap for a specified period.
The sanitaryware industry has seen a hike in the products comprising of metal constituents, but now, manufacturers are likely to see stability in the pricing of the products.
Local industries can fight imports - Samir Bhatia, Founder and CEO, SMEcorner
An increase in import duties for certain products and rationalisation of duties in the case of many items manufactured by MSMEs will help local industries compete against imports and boost their revenues. Other changes such as increasing the limit for tax audit to Rs 10 crore of annual turnover for ‘digital’ MSMEs is a welcome step. The budget will provide a major impetus to all sectors of the economy.
An unwavering show of support to MSMEs - Ketan Gaikwad, MD and CEO, Receivables Exchange Of India (RXIL)
Ketan Gaikwad, MD and CEO, RXIL
The allocation of Rs 15,700 crore will be key for this sector that is emerging from the pandemic induced lockdown. This Budget is an unwavering show of support for MSMEs and will not only encourage investment and support the Atmanirbhar Abhiyan, but also develop the quality of life for citizens of the country.
We are glad that the Finance Minister has allocated Rs 1,500 crore to promote digital payments in the country. Further details are awaited, and we expect the funds to be well-utilised and support extended to the MSME ecosystem in adopting digital infrastructure, with a continued focus on formalisation of the sector.”
Incentivising digital payments a gamechanger - Sonakshi Nathani, Co-founder and CEO, Bikayi
As a WhatsApp-integrated startup catering to MSMEs, we welcome the decision of doubling MSME allocation. In the past six months with lockdown restrictions, we have seen increased adoption of digital mediums to run businesses. However, lack of understanding, ease of use and incentives, restricts these businesses to explore them further.
Hence, the decision to promote digital transactions and attach financial incentives to promote a digital mode of payment will be a gamechanger in the MSME segment, specifically for local e-commerce players.
For YourStory's multimedia coverage of Budget 2021, visit YourStory's Budget 2021 page or budget.yourstory.com.