On July 23, 2024, Indian Finance Minister Mrs. Nirmala Sitaraman unveiled a transformative Union Budget. It includes groundbreaking measures to boost the MSME (Micro, Small, and Medium Enterprises) sector. This budget aims to enhance the competitiveness of MSMEs, which are vital to the manufacturing industry, contributing around 35% to output and providing millions of jobs. The budget features innovative initiatives, generous financial packages, and smart regulatory changes. These measures are designed to empower and elevate the MSME sector, addressing its unique challenges and unlocking its full potential. Read on to learn various provisions Indian Union Budget 2024 for MSMEs.
Table of content
- New Bank Credit Mechanism Supports MSMEs in Financial Stress
- Government Doubles TARUN Loan Limit for MSME Growth
- Government Expands TReDS Participation to Boost MSME Cash Flow
- SIDBI to Open 24 New Branches for Enhanced MSME Support
- New E-commerce Export Hubs to Boost MSME Market Access
- Accelerate your MSME’s growth with Venwiz
- Tailored Financial Solutions for Your Business
New Bank Credit Mechanism Supports MSMEs in Financial Stress
The new mechanism allows for continuing bank credit to MSMEs during financial stress, addressing liquidity and cash flow issues, helping cover operational expenses, purchasing necessary machinery and equipment, and preventing defaults and bankruptcy. It also supports investment in recovery strategies, improving creditworthiness and building resilience against future shocks. The move aims to boost confidence and morale among MSMEs and is crucial for maintaining operations and fostering a positive business environment
Government Doubles TARUN Loan Limit for MSME Growth
The government has doubled the loan limit for MSME users in the TARUN category of Mundra loan from ₹10 lakhs to ₹20 lakhs, rewarding creditworthy businesses with a repayment history, encouraging timely repayments and fostering financial discipline. With increased access to capital, MSMEs can expand operations, upgrade equipment, and enhance their market competitiveness.
New Credit Guarantee Scheme Eases MSME Financing
GOI introduced a new credit guarantee scheme for manufacturing MSMEs, enabling them to obtain credit without collateral or third-party guarantees. The government will back these loans through a self-financing guarantee fund, offering guaranteed coverage of up to ₹100 crore per applicant. Borrowers must pay an upfront guarantee fee and an annual fee based on the reduced loan amount. This scheme lowers credit barriers, supports MSMEs in financing operations and growth initiatives, and is crucial for maintaining and expanding business activities.
Government Expands TReDS Participation to Boost MSME Cash Flow
SIDBI to Open 24 New Branches for Enhanced MSME Support
SIDBI plans to open 24 additional branches over the next three years to improve reach and support for MSMEs. This expansion will extend credit and support to 168 major MSME clusters. By expanding its reach, SIDBI aims to make financing and support more accessible to MSMEs across India, helping them grow and succeed.
New E-commerce Export Hubs to Boost MSME Market Access
To help MSMEs access new markets, the government has established E-commerce export hubs through private-public partnerships (PPP). These hubs will provide a one-stop solution for MSMEs and artisans to sell their products globally. By streamlining the export process and providing necessary assistance, these hubs hope to improve India’s export competitiveness and expand the markets for MSMEs.
Budget Boosts Food Safety with New Irradiation Units and Labs for MSMEs
The budget addressed the pressing need to improve food and safety standards in the MSME sector. The government will provide financial support for setting up 50 multi-product food irradiation units and creating 100 NABL-accredited laboratories. The government hopes these initiatives will improve the sector’s quality control processes, ensuring it meets the required safety and quality standards for domestic and international markets.
New Credit Evaluation Model for MSMEs by Public Sector Banks
Public sector banks in India will now assess MSMEs for credit using an in-house capability. They will develop a new credit evaluation model based on the digital footprints of MSMEs. This will replace traditional methods that rely solely on assets or turnover.
he 2024 budget aims to support and empower the MSME sector by enhancing financing options, simplifying regulations, and promoting technological advancements. Key announcements include increased MUDRA loans, new loan guarantees, better access to trade finance, more SIDBI branches, and support for exporting online. These initiatives aim to improve liquidity, financial stability, market access, and competitiveness in both domestic and global markets.
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