The Budget 2020-21 is out! Do you know how things are going to impact SMEs like you?
Here are 20 key announcements regarding MSMEs made by Finance Minister Nirmala Sitharaman on Feb 1st:
- A simpler GSTR filing system will be introduced from April 1, 2020.
- ₹1,000 crore is invested to help mid-sized businesses in export development, R&D and technology upgrade.
Rs 805 crore has been allocated under Credit Linked Capital Subsidy and Technology Upgradation Scheme (CLCS-TUS) to improve competitiveness of MSMEs through technology.
- e-Marketplace (GeM) will be setup to procure goods, services and works from SMEs.
3.24 lakh vendors are already on this platform.
- Non-banking financial companies (NBFCs) will extend invoice financing to MSMEs through TReDS.
- Subordinate debt will be provided by banks to provide working capital for SMEs.
- RBI will extend debt restructuring for one more year till March 31, 2021 (which earlier had a deadline till March 2020).
- An app-based invoice financing loans product will be launched.
Problem of delayed payments and cash flow mismatches for the MSMEs will get eliminated.
- Small Business turnover threshold for audit is increased from Rs 1 cr to Rs 5 cr.
This will reduce the compliance burden on small retailers, traders & shopkeepers.
However, this applies only to those businesses which carry out less than 5% of their business transactions in cash.
- Customs duty on footwear and furniture will increase.
This is to restrict low-quality imports.
The rate of duty for footwear is raised from 25% to 35%, and for “parts of footwear” from 15% to 20%.
The rate for specified furniture goods is being raised from 20% to 25%.
- Budget 2020 proposes to improve manufacturing of mobile phones, electronic equipment, and semiconductor packaging.
- National logistics policy will be released
This will create a single window e-logistics market and make MSMEs even more competent.
- Higher insurance cover for exports
A new scheme is being launched to provide higher insurance cover and reduce the premium for small exporters.
It will also simplify the procedure for claim settlements.
- Nirvik scheme will be introduced for export tax disbursement
Nirvik is a New Export Credit Insurance Scheme (ECIS) by Export Credit Guarantee Corporation of India (ECGC).
The ECGC provides credit guarantee of up to 60% loss, but under Nirvik, the insurance cover guaranteed will cover up to 90% of the principal and interest of loans and will include both pre and post-shipment credit.
Aims to make loans easier to access for exporters and also simplify the lending process.
- Rs 2.83 lakh crores allocated for agro and allied sectors.
- Around 35 lakh farmers will be helped for setting up solar pumps to grow crops even out of barren lands.
- The budget also provides 152 million metric tonnes of warehousing facilities.
- The Khadi Vikas Yojana and Gramodyog Vikas Yojana have been allocated Rs 472 crore to develop Khadi based businesses in the villages and small towns.
- The National Scheduled Caste/Scheduled Tribe Hub is given Rs 150 crore to provide professional support to SC/ST entrepreneurs.
- A digital platform will be set up for seamless application and capture of Intellectual Property Rights (IPR).
- Rs 2,500 crore will be allocated for generating self-employment opportunities in the non-farm sector by helping traditional artisans and rural/urban unemployed youth.
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