Union Budget 2024: Measures announced in budget to boost MSME sector, generate more jobs

MSME players on Tuesday said measures like massive reduction in TDS on e-commerce operators demonstrate the government's commitment to strengthen small enterprises and generate more jobs in the key sector of the economy.

Finance Minister Nirmala Sitharaman, in the FY25 Budget, proposed eight measures to bolster the key MSME sector which accounts for 45% of India's manufacturing and 40% of exports.

"We welcome the government's decision in the Union Budget to reduce TDS to 0.1% for e-commerce operators and to develop a new credit assessment model based on the digital footprints of MSMEs," said Anil Bhardwaj, Secretary General of Federation of Indian Micro Small and Medium Enterprises.

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He said with the e-commerce industry being projected to reach USD 350 billion by 2030, these initiatives will not only advance India's digital economy but also benefit sellers and MSMEs alike.

Sitharaman said the budget provides special attention to micro, small & medium enterprises (MSMEs) and manufacturing, particularly labour-intensive units.

Sanjay Sharma, MD and CEO, Aye Finance, said the organised SMEs should benefit from the larger MUDRA loan limits under the Tarun category, the increased corpus of credit guarantee scheme and the enablement of Treds for those with turnover of ₹250 crore.

"However, the micro-scale enterprises that generate the bulk of the non-agri jobs have no specific programme except some trickle-down from the ₹100 crore credit guarantee fund. Here the simplification of Credit Guarantee Schemes for the micro loans would have helped, but that will need some more wait," Sharma added.

H S Bhatia, Managing Director, DAEWOO India, said the new credit guarantee scheme for MSMEs offers up to ₹100 crore for term loans without any collateral. This could empower smaller manufacturers in the consumer durables to expand operations and innovate, leading to a more competitive market.

"The budget's focus on job creation will benefit manufacturing and boost consumption, with positive impacts on sectors such as consumer durables," he said.

Ayush Lohia, CEO, Lohia, said the government's focus on MSME support and job creation in manufacturing aligns perfectly with the industry expectations.

"The new scheme incentivizing job creation in manufacturing, with EPFO contribution reimbursements for employers, is expected to significantly benefit manufacturers across various sectors. This could lead to increased production capacity and job opportunities, with 30 lakh youth and their employers set to benefit," Lohia added.

Saurabh Rai, CEO of Arahas, emphasised the vast opportunities it presents for advancements in geographic information systems (GIS), space exploration, sustainability initiatives, and land record modernisation.

"The Indian government's commitment to the space economy is evident with the proposal to set up a venture capital fund of ₹1,000 crore. This fund is designed to support private sector-driven research and innovation at a commercial scale," Rai said.

Rohit Arora, Co-Founder & CEO, Biz2Credit and Biz2X, said the decision to open e-commerce export hubs for traditional artisans and MSMEs is good for the economy.

"Moreover, the government's focus on simplifying tax regulations is a game-changer for small and mid-size enterprises, providing the clarity needed to plan and invest with confidence. This clarity will drive innovation and attract investments across various sectors," Arora added.

The emphasis on boosting manufacturing, supporting local industries, and encouraging domestic production is essential for reducing import dependency and strengthening our industrial base, he added.

Ankit Kumar, CEO, SkyeAir Mobility, said the budget presents big opportunities in agriculture, infrastructure, and deep tech sectors.

"The budget's emphasis on the deep tech sector is seen as a boost for innovation in drone technology. This could lead to advancements in AI, machine learning, and IoT integration with drones, enhancing their capabilities and expanding their uses," Kumar said.

Jitendra Tanwar, Managing Director & CEO of Namdev Finvest, said the government has embarked on a strategic initiative aimed at fostering a more skilled workforce and enhancing entrepreneurial prospects.

"This multi-faceted approach not only addresses the pressing need for job creation but also seeks to elevate the economic landscape through the empowerment of MSMEs," he said.

The government's strategic focus on employment, skilling, and MSME development represents a pivotal step towards creating a more robust and inclusive economic framework, Tanwar added.