Budget 2021: FM Nirmala Sitharaman allocates Rs 15,700 Cr to MSMEs, exempts customs duty on products
Addressing the Lok Sabha today, Finance Minister Nirmala Sitharaman presented the Union Budget 2021, focussing on the Aatmanirbhar Bharat vision to make a V-shape recovery of the economy.
She said the government's Aatmanirbhar packages, which totalled Rs 27.1 lakh crore to deal with the COVID-19 pandemic, accelerated the pace of structural reforms.
Pillars of Budget 2021
The budget 2021 rests on six development pillars of:
Health and well-being
Physical and financial capital, and infrastructure
Inclusive Development for Aspirational India
Reinvigorating Human Capital
Innovation and R&D
Minimum government, maximum governance
Budget 2021 for MSMEs
With the country still reeling from the health and economic impact of the COVID-19 pandemic, the micro, small, and medium enterprises (MSMEs) and other small businesses had pinned high hopes from the Union Budget 2021 to give them relief, especially the businesses which have suffered tremendously during the lockdown and have survived.
In Budget 2021, 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 more than double of the last year,” she said.
The MSME sector was allocated Rs 7,572 crore in the Union Budget 2020-21.
In the announcement, the Finance Minister said that the definition of small companies will be revised by raising the capital base to Rs 2 crore from the current limit of Rs 50 lakh, and the turnover of whose is between Rs 2 crore and Rs 20 crore. This will benefit two lakh companies in easing their compliance requirements.
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.
“For a five-trillion dollar economy, our manufacturing sector has to grow in double digits on a sustained basis. Our manufacturing companies need to become an integral part of global supply chains,” Sitharaman added.
To boost the local textile industry and help India to become one of the leading manufacturers of textile in the world, FM Nirmala Sitharaman in Union Budget 2021 announced the establishment of seven textile parks.
She said that the local electronics manufacturing industry has grown phenomenally and the country is now exporting mobiles and chargers. For greater value addition, the government is withdrawing a few exemptions on part of chargers and sub-parts of mobiles.
“MSMEs and other user industries have been severely hit by a recent sharp rise in the iron and steel price. Therefore, we are reducing customs duty uniformly to 7.5 percent on semis, flats, and lough products of non alloy, alloy, and stainless steel. I am also exempting duty on steel and copper scrap, textile fabrics” she announced.
Last year for MSMEs: Budget 2020
Budget 2020 proposed to boost the manufacturing of mobile phones, electronic equipment, and semiconductor packaging. The Finance Minister said this could also be used to uplift medical devices manufacturing.
In her speech, she had announced a scheme to subordinate debt to MSMEs. She asked banks to extend restructuring MSME NPAs for one more year, which had a deadline of March 2020.
“Over five lakh MSMEs have benefitted from debt restructuring,” she had said, adding that the MSME sector will be allocated Rs 900 crore in debt funding.
Further, she said an app-based invoice financing loans product will be launched to alleviate the problem of delayed payments and cash flow mismatches for MSMEs. She also said amendments will be made to enable NBFCs to extend invoice financing to MSMEs.
For YourStory's multimedia coverage of Budget 2021, visit YourStory's Budget 2021 page or budget.yourstory.com