Saga of Economic Growth is Getting Written: Union Budget 2019
MSMEs having so much potential to contribute to the country’s GDP also has great potential to contribute in PM Modi’s vision of job creation. But this sector also posses several critical challenges. These challenges are roadblocks for Indian MSMEs to excel and exceed ahead. Here are some key demands, opinions and recomendations from the industry, observed and compiled by Faiz Askari of SMEStreet.
Less than 72 hours are left for the much-awaited Budget session speech of Finance Minister, Nirmala Sitharaman from the Indian Parliament. The stage is almost set for the mega policy document to be made public. But, as you, know SMEStreet have been continuously getting industry-wide demands, opinions and recommendations for the Union Budget 2019. This budget holds great importance, being the first budget of Prime Minister Narendra Modi’s second innings as India’s chosen leader to lead the country. The entire nation is awaiting several schemes, incentive programs like it always do, every year. However, the MSME sector which is the central focus for SMEStreet and it is the central focus for policymakers as well who are working day and night to take GDP growth to new heights. MSMEs having so much potential to contribute to the country’s GDP also has great potential to contribute in PM Modi’s vision of job creation. But this sector also posses several critical challenges. These challenges are roadblocks for Indian MSMEs to excel and exceed ahead.
Access to credit, access to newer markets and documentation are still some challenges that the MSME sector faces. Two years ago, GST roll out made this sector go on roller coaster ride but things have settled to a better and peaceful stream of doing business. However, some experts also believe that the aftershocks of landmark GST implementation still haunts some sectors of MSMEs.
All these issues are in the top level mindset of a typical MSME entrepreneur.
Recent Scenario at Policymaking
We are hopeful this time more than in previous years. The reason for this expectation change is MSME leadership. Being led by Modi Cabinet’s tier one performer, the MSME Ministry has a lot to cover under the leadership of Mr. Nitin Gadkari. He is being quoted for emphasizing his path-breaking vision for reviving the economic growth path through MSMEs.
We hope, with Nitin Gadkari’s leadership the entire MSME sector is looking up to reforms that can make the experience of doing business not just easy but also fruitful.
Here are some demands that industry leaders and MSMEs themselves have made from Mrs. Nirmala Sitharaman.
Mr. Kumar Abhishek, CEO& Co-founder, Amazon backed ToneTag:
“Among various agendas, Prime Minister Narendra Modi has taken steps to promote young entrepreneurs in the country. The startup ecosystem is eyeing the Union Budget 2019, as the government is slowly recognizing the potential of startups and framing policies that create a favourable environment for them. While the Startup India Scheme has definitely provided multiple benefits to startups in the form of easy license clearance, tax cuts, and minimum regulatory interference, there is still scope for many more reformative policies which will further ease out the journeys of start-ups.”
Mr. Alok Mittal, CEO & Co-founder, Indifi Technologies:
“Credit inclusion for MSMEs is a critical imperative to enable growth and job creation in India. We expect the upcoming budget to define concrete steps to mobilize access to financial services and empower the fintech companies that facilitate them. For instance, facilitating access to wholesale capital, and extending credit guarantee schemes such as MUDRA can help in bolstering the impact and reach of these initiatives. Similarly, opening up API based access to data within government and banking domains can help expand the reach of digital credit.”
Mr. Himanshu Gander, Director, Corporate Center, The Minimalist.
“We believe the existing GST structure needs to be streamlined to quite an extent. MSMEs face a lot of challenges and are generally in need of a good cash-flow to achieve their growth targets. Irregular input on the GST makes things a little tight for them.
As an organisation which heavily focuses on providing design and digital services, we are definitely looking forward to some additional budget being allocated by the government to improve the digital infrastructure of the economy. A robust digital structure is a need of the hour.”
Mr. Dilip Modi, Founder and Chairman, DiGiSPICE:
“There is great anticipation around the presentation of Union Budget 2019. After a consecutive majority mandate received by the BJP and this being new Finance Minister Nirmala Sitharaman’s maiden budget, market stakeholders are following the proceedings with keen anticipation. Also, the strength of its electoral mandate enables the government to initiate long-term transformational projects. Technology will play a great part in this transformation and already we can see various projects under the National e-governance plan taking shape across states. Maharashtra has set an example of optimized digital adoption and we can see the central government and many other states adopting AI, machine learning and data analytics to bolster public service framework.
Dedicated ‘Special Digital Zones’ like SEZs, operational subsidies, reducing import duties on essential hardware and components, guidelines to safeguard Intellectual Property and development of institutions to aid in upskilling are areas that will continue to receive focused attention. Incentives can be expected to promote greater adoption of digital solutions in the SME and MSME sector. As India emerges as a service-sector driven economy for the long run, digital infrastructural investment, both for enterprises and for the nation, will become essential. The Union Budget 2019 will feature decisions that go a long way in optimizing the transparency and judicious utilization of resources. There is a great opportunity for us to use Aadhar as an authentication platform to drive financial inclusion across semi urban and rural India.”
Ms. Sudeshna Datta, Co-Founder & Executive Vice President, Absolutdata:
“Being a technology service provider, we are eagerly waiting for the Union Budget 2019. We expect the government to bring in new SOPs aimed at driving the growth of this sector. Although the Modi-led NDA has taken several initiatives to address the massive skill gap that India continues to face, we believe there’s still room for improvement. With technologies like artificial intelligence, machine learning and data analytics disrupting the very nature of industries, there is an urgent need for upskilling and reskilling the Indian youth. Therefore, we hope more funds will be allocated towards the development of tech-based skill-building and training programmes. Other than that, the government should consider easing the ECB (External Commercial Borrowing) norms to ensure start-ups have a steady inflow of capital from foreign investors. This will facilitate the growth of early-stage tech start-ups, which often suffer due to fund shortage. We are also seeking tax relaxation from the forthcoming budget. Moreover, we want the government to bring down the Minimum Alternate Tax (MAT) charged on SEZ developers from 18.5% to 12-15%. It was imposed in 2013, and it’s about time that the government brings forward a more favourable policy.”