Union Budget 2024-25: MSMEs bat for Rs 5,000 crore export booster

India SME Forum suggested setting up an export promotion and development organisation to support MSMEs in market intelligence, trade opportunities, B2B outreach and connections

India SME Forum, an organisation for small and medium businesses, has called for creating a dedicated fund of Rs 5000 crore for the export capacity development, promotion, and marketing of Micro, Small & Medium Enterprises (MSMEs) in its Budget recommendation.

The forum for MSMEs with over 98,000 members said that to enhance India's global competitiveness and increase its market share in global exports, it was “crucial to increase the number of active exporters and enable at least 3-4 lakh first-time micro, small, and medium exporters while supporting them in promoting Indian products globally.”

It suggested setting up an export promotion and development organisation to support MSMEs in market intelligence, trade opportunities, business-to-business (B2B) outreach and connections. The organisation also pitched for promoting Indian products in the global market, much like the US Commercial Service, Japan External Trade Organization (JETRO), Korea Trade-Investment Promotion Agency (KOTRA), and the Australian Trade and Investment Commission (AUSTRADE).

 

“Implementing a massive open export familiarisation programme to support first-time MSMEs in visiting and exhibiting in sectoral, business-to-business (B2B) exhibitions, in potential markets much like China, Taiwan, Vietnam, and (South) Korea, which offer such opportunities to thousands of small enterprises every year,” said Vinod Kumar, President of the India SME Forum.

The PHD Chamber of Commerce and Industry (PHDCCI) recommended certain concessions for Public Sector Undertakings (PSUs) and large companies joining Trade Receivables Discounting System (TReDS) be considered.

“Large companies can be allowed additional funding by banks to the extent of 50 per cent of MSMEs' annual purchases, and all companies with an annual turnover exceeding Rs 250 crore should be advised to register on TReDS platforms to improve the quicker realisation of dues of the MSMEs,” it said.

The Reserve Bank of India (RBI) launched TReDS in 2014 to facilitate the discounting of invoices and bills of exchange of MSME suppliers. The process of TReDS involves uploading invoices and bills by MSMEs for discounting by converting them into factoring units, which have to be accepted by corporate buyers before their discounting can take place by financiers, who will then receive their payments from the bank of the corporate buyer.

Associated Chambers of Commerce and Industry of India (ASSOCHAM) President, Sanjay Nayar said there was a compelling need to establish MSME universities with specialised courses and training programmes aimed at enhancing the competitiveness of SMEs on a global scale. “These universities would serve as hubs of knowledge and innovation, equipping MSMEs with essential skills in areas such as technology adoption, financial management, quality management, market strategy, and compliance with international regulations,” he added.

Kumar also recommended that to bolster the creditworthiness of informal enterprises, the government should consider bringing all enterprises under the ambit of the Goods and Services Tax (GST) regime, even if their turnover is less than Rs 40 lakh (for goods) and Rs 20 lakh (for services) and are not required to register for GST payment.

“By mandating GST registration for all and recording all transactions, the government can create a comprehensive digital footprint of their financial activities. This data can also serve as a reliable source for lenders to assess the creditworthiness of these enterprises, enabling access to finance,” added Kumar.

To promote Geographical Indications (GIs) products, SME industry bodies asked for the creation of a Rs 500 crore fund for its promotion. India has 643 Geographical Indications (GIs) as of June 2024. “We recommend the creation of a Rs. 500 crore fund as it is imperative to initiate a comprehensive programme aimed at identifying, strengthening, promoting, and popularising Indian GIs on a global scale through implementing agencies with experience in enterprise acceleration and global promotion,” said Kumar.

India SME Forum

> Rs 5,000 cr: Dedicated fund for export capacity development, promotion, marketing of MSMEs

> Promote Indian products in global market, on the lines of the US Commercial Service, others

> Mandate GST registration, record all transactions to create digital footprint 

PHD Chamber of Commerce and Industry

> Provide concessions for PSUs and large firms joining Trade Receivables Discounting System (TReDS)

> TReDS involves uploading invoices and bills by MSMEs for discounting 

> 50% of MSMEs’ annual purchases: Additional funding by banks

Assocham

> Establish MSME universities with specialised courses and training programmes 

> Bring all enterprises under GST, even if turnover < Rs 40 lakh (for goods) and < Rs 20 lakh (for services)