Ahead of Budget, MSME representatives submit suggestions to Finance Minister

Representatives of the MSME industry on Friday made a host of recommendations to Finance Minister Nirmala Sitharaman for the Union Budget to provide a fillip to the sector.

Sitharaman chaired the fifth pre-Budget consultation with representatives from micro, small and medium enterprises (MSME) to gather suggestions for the upcoming General Budget 2024-25, the finance ministry said in a social media post.

The full Budget 2024-25 is expected to be presented in Parliament next month.

MSME representatives who attended the meeting made detailed recommendations on various issues, including constraints faced by the sector in obtaining institutional financing, the RBI's norms related to NPA classification, and 45-day payment rule.

Recommendations of the Federation of Indian Micro and Small & Medium Enterprises centred on 10 points, including a mechanism for NPA classification, disaster support mechanism for MSMEs engaged in international trade, and operationalising the use of insurance surety in lieu of bank guarantees.

Talking to reporters after participating in the nearly two-and-a-half-hour meeting, General Secretary of Laghu Udyog Bharati Om Prakash Gupta said his association gave eight suggestions to Sitharaman for capacity building in the MSME sector.

Regarding the 45-day payment rule under Section 43 b(h) of Income Tax Act, Gupta said, "We have always advocated for that" as small players suffer because of delayed payments.

Former vice-president of Bihar Industries Association Sanjay Goenka, who was present in the meeting, said the discussion also focused around incentives for the MSMEs sector.

Rajkot Chamber of Commerce President V P Vaishnav said the meeting was fruitful with 14 MSME associations and chambers of commerce in attendance.

Talking to reporters, Subodh Jindal, President of All India Food Processors' Association, said a suggestion was made that the depreciation rate in the Income Tax Act for plant and equipment be increased to 25% from the existing 15 %.

Murali Krishna, President, Federation of Andhra Pradesh Small and Medium Industries Association, said they sought to exempt MSMEs from tax on certain projects like the Polavaram project and the Amaravati Capital projects.

Earlier in the day, Sitharaman also held a consultation meeting with farm organisations and experts who pitched for higher investment in agricultural research, rationalisation of fertiliser subsidies and infrastructure development to boost the sector's resilience against climate change.

The two-and-a-half-hour meeting saw stakeholders advocating for a significant hike in the budget allocation for the Indian Council of Agricultural Research from Rs 9,500 crore to Rs 20,000 crore.

The consultation meeting was also attended by Union Minister of State for Finance Pankaj Chaudhary and other senior officials of the ministry.