New Delhi, January 31, 2023.

Given the growing stature of India amid the challenging global scenario, the upcoming Union Budget will be keenly watched by many. Apart from the twin objectives of reining in the fiscal deficit and inflation, the Govt will also need to take up measures to boost economic growth, including exports. Considering the key contribution of MSMEs in supporting both economic growth and employment, the Govt will surely look to come up with specific measures to support MSMEs in building their capacity, get easier access to capital and upskill their talent. In fact, considering the widespread support from State Governments, getting MSMEs to participate meaningfully in the Production-Linked Incentive (PLI) schemes will also expand the scope of their growth."

“Considering MSMEs contribute approx. 45-50% to India's exports, some specific measures to support this segment will be key to build our exports. Things like, 1) Widening the scope of interest equalisation subsidy or remission of specific duties/taxes for this segment; 2) Setting up Promotion Councils to help them go overseas for marketing or managing trademarks, patents, compliances, etc.; and 3) In general, investing in developing export logistic infrastructure and expanding the FTAs to more nations should help the cause. Additionally, to expand bank credit to this segment, especially for Micro Enterprises (where thin credit information and higher cost to serve for banks is an issue), the Govt can look to bring support through some credit guarantee scheme (maybe similar to ECLGS) or a separate subsidy/priority status for this segment of customers (maybe similar to the support extended to small & marginal farmers). A separate Credit Rating and attendant risk-weight framework for the MSME segment could also help differentiate and support them in a better way."