3 Feb 2022, 12:09 — 9 min read
GlobalLinker recently hosted a webinar, featuring seasoned Chartered Accountant and Tax Expert, Ritul Patwa, where he shared his insights on the impact of Union Budget 2022 on the MSME sector. Watch the webinar recording below.
Here is a summary of some of the key questions that Ritul Patwa addressed.
Q. What are the top 3 positives for MSMEs in this budget?
A. 1. The government is revamping the Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE) scheme with the required infusion of funds. The move will facilitate additional credit of Rs 2 lakh crore for micro and small enterprises (MSEs) and expand employment opportunities. This scheme entails colletral free funding upto Rs 2 Crore for Micro and Small Enterprises without collateral.
2. The government has launched “Raising and Accelerating MSME Performance i.e. RAMP” programme with an outlay of Rs 6,000 crore over the next five years. This will help the MSME sector become more resilient, competitive and efficient. Importantly, RAMP is a part of the MSME Competitiveness – a post Covid Resilience and Recovery Programme (MCRRP) by the government.
3. Interlinking of Government Portals - In order to make seamless access to government data on registration of MSMEs, unorganised workers, availability of skilled workforce, etc., government is interlinking four portals viz., Udyam, e-Shram, National Career Service (NCS), and Atmanirbhar Skilled Employee-Employer Mapping (ASEEM).
Q. Can you please elaborate what these 4 portals are all about and how their interlinking will help MSMEs?
A. First I will elaborate the objective of each portal and then I will discuss the benefits of interlining these portals.
1. Udyam - This is for MSME Registration
2. e-Shram – It is a National Database for unorganised workers
3. NCS (National Career Service) – It provides employment services like job search, job matching, career counselling etc
4. ASEEM (Atmanirbhar Skilled Employee-Employer Mapping) – It does matching of the supply of skilled work force with the market demand.
Benefit of interlinking is that it will widen their scope and will have live, organic databases, providing G2C, B2C and B2B services. These services will relate to credit facilitation, skilling and recruitment, with an aim to further formalise the economy and enhance entrepreneurial opportunities for all.
Q. Is there any relief on the Taxation front for MSMEs?
A. Firstly, the Government has done reverse engineering in the Customs Duty for the benefit of MSMEs.
On the Direct Tax front, government has extended the last date for commencement of production up to 31 March 2024, for New Domestic Manufacturing Units for claiming a lower Tax Rate of 15% u/s 115 BAB of Income Tax Act. Similarly, the date of registration of an eligible startup for 3 years Tax Exemption out of first 10 years u/s.
Q. Tourism and hospitality sectors have suffered the most during the pandemic. Any relief for them in this Budget?
A. Fortunately, Covid-19 will soon be an endemic. Hospitality is one of the fastest recovering sector. Though the pricing is still subdued, but we are seeing quick recovery in occupancy numbers and the same will improve once international tourism resumes.
Government has created an Emergency Credit Line Guarantee Scheme (ECLGS) for the immediate relief of the Industry during COVID19. In this budget this scheme has been extended till 31 March 2023, with an additional funding support of 50k Crore to the hospitality and related industry. This will provide them a collateral free additional funding of 20%, to revamp their business and reach to pre-Covid level.
Q. What are the Sunrise Sectors that have tremendous opportunities for MSMEs?
A. There are several new opportunities that are coming up for MSMEs. In my view, the key sunrise sectors, that will create a galaxy of new MSMEs stars are:
Q. Can you elaborate any of these with an example of how the MSMEs can be benefit from this?
A. Okay, let me discuss this with the opportunity in the Agri-Tech sector. We all are aware that currently property market is passing through a slump period, especially for rural areas and distant land parcels. So does that mean that an entrepreneur, who is interested in Organic Farming, Agri-Tech and Green House Farming, with use of technology, can explore the Government schemes and subsidies in this sector and start his/her own business. It’s a completely win-win situation, where:
So if somebody calls it a 'jackpot opportunity', I will not differ with them.
Q. Any other structural change that has benefitted MSMEs in this budget?
A. The Government has proposed certain transformational changes in its procurement procedure that are going to help MSMEs in a big way, in the long run:
Q. What more do you feel the Government could have done for SMEs?
A. In my view, the Government’s job is to create an ecosystem that provides opportunities to scale-up the business of SMEs. Conventional business is getting difficult due to massive competition and large conglomerate entering these sectors, but simultaneously new generation opportunities are also developing. I believe we need to foster and support the businesses like a sapling in the beginning, till it becomes a tree and gives its fruits to the society at large.
Q. How would you rate the budget on a scale of 1- 10?
A. First the Government has taken bold step, by not making it a populist budget despite of upcoming election in key states.
Second, the Government has maintained a stable and predictable tax regime.
Third, Government has kept its focus on infrastructure development and long-term capital expenditure, with a 10 years futuristic View.
Overall, I would give this budget a rating of 8 out of 10, while expecting a 10 on 10 budget next year!
Discliamer: The views and opinions expressed in this article are those of the featured expert and do not necessarily reflect the views, official policy or position of GlobalLinker
Posted byGlobalLinker Staff
We are a team of experienced industry professionals committed to sharing our knowledge and skills with small & medium enterprises.
29 Jul 2022, 09:46
22 Jul 2022, 10:31