Budget Impact on MSMEs

The pandemic had one of its worst implications on the MSMEs (Micro, Small, and Medium Enterprises). It exacerbated the sector's long-standing issues.

The Finance Minister, Nirmala Sitharaman, started her Union Budget 2021-22 presentation by noting the pandemic's dire consequences on the Indian economy and its people. Then she embarked on launching a plethora of schemes for the MSME sector.

Here are the key highlights of the Union Budget for the MSMEs:

1. Double the emphasis, double the allocation

• This year, the Finance Minister committed an expenditure of ₹ 15,700 crores for the MSME sector which is more than double the previous year.
  This should be a good starting point to help them regain their lost ground. Most of the allocation is towards the ECLGS (Emergency Credit Line Guarantee Scheme).

2. Improved grievance redressal framework

• The Finance Minister announced the setting up of a special framework for MSMEs in National Company Law Tribunal (NCLT) for debt resolution.
• The framework would include alternate methods and establishing e-courts for faster grievance redressal.

3. Custom duty revision to bolster local manufacturing

• The Union Budget 2021-22 has reduced the customs duty to 2.5% for copper recyclers from 5%.
• The customs duty on finished synthetic gemstones has been increased to put a higher emphasis on domestic processing.
• The Union Budget also reduced customs duty on semis, flats, and long products of non-alloy, alloy, and stainless steel products and fixed it to 7.5%.
• The Government has increased the duty on steel screws, prawn feed, and plastic builders to 15%.

4. Steel scrap duty exemption to continue up to 31st March 2022

• Metal recyclers, mostly belonging to the MSME sector, have enjoyed duty exemption on steel scrap, which was about to end in 2021. The Finance Minister extended the period up to 31st March 2022.
• The Budget also revoked ADD and CVD on some steel products.

5. Allocation towards setting up of new MSME technology centres

• The Union Budget 2021-22 has proposed an allocation of ₹ 300 crores for setting up new technology centres for the MSME units.

6. Incentivising exporters

• To incentive exporters of garments, leather and handicraft items that are primarily made by MSMEs the Union Budget announced the withdrawal of exemptions on imports of certain kinds of leather as they are manufactured domestically in quality and quantity.

7. The Budget has the heart in the right place for the MSMEs.

• The last few months have seen the government introduce several measures to reduce the pandemic's impact on the MSME sector. The Budget 2021-22 reinforced the ideology and could be an excellent start towards prosperity.
  
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