Key announcements for the MSME sector in the Union Budget 2021

The finance minister Nirmala Sitharaman in the Union Budget 2021-2022 had made a provision of Rs. 15,700 crores for the Micro, Small, and Medium Enterprises (MSME) sector. This year’s budget had taken several steps to support the MSME sector.

The finance minister began the presentation by stating the severe consequences and impact of the coronavirus pandemic on the economy and the lives of the individual. She also mentioned the mid-year launch of the Aatmanirbhar Bharat mission that intends to make India self-reliant.

The list of schemes launched for the MSME sector are:

•    The MSME sector received an increase in the proposed capital expenditure for this year. The finance minister had earmarked Rs.15,700 crore for the MSME sector, which is double the capital expenditure recommended in the budget of 2020-2021.

•    The customs duty on semis, flat, as long as long products of non-alloy, alloy, and stainless steels for the benefit of the MSMEs hard hit by means of the coronavirus pandemic was reduced to 7.5% uniformly.

•    The Finance Minister to provide relief towards metal recyclers, mostly MSMEs, exempted duty on steel scrap for a period up to 31st March 2022. Further, she also revoked the ADD and CVD on certain steel products.

•    For copper recyclers, the customs duty concerning the copper scrap was reduced to 2.5% from 5%.

•    For the textile industry and MSMEs in the textile industry nylon chain was made in par to polyester as well as other artificial fabrics as part of rationalizing duty on raw materials.

•    The duty on steel screws and plastic builder wares was increased from 10% to 15% while on prawn feed it has augmented to 15% from 5%.

•    In order to incentive exporters of garments, leather, and handicraft products that are primarily made by MSMEs the budget had announced the withdrawal of exemptions on imports of certain types of leathers as they are made domestically in quality and quantity.

•    Custom duty on finished synthetic gemstones was also increased to boost its domestic processing.

•    The finance minister had announced the creation of a special framework for MSMEs for debt resolution. In order to settle cases faster, the NCLT framework would also be strengthened which includes the implementation of the e-Courts system.

Also, for further facilitating the credit flow under the scheme of Stand Up India for the Scheduled Caste and Scheduled Tribes and also women, the Union Finance Minister had proposed towards reducing the margin money requirement from 25% to 15% only as well as include loans for activities in allied activities in agriculture. 

The proposals of the Union Budget 2021-2022 were focussed on six pillars -- Health and well-being, physical and financial capital and infrastructure, inclusive development for aspirational India reinvigorating human capital, innovation, and Research and Development, and minimum government and maximum governance.

Sitharaman stated that the preparation of this Budget had been undertaken in the Covid 19 pandemic circumstance that has affected the country.

Meanwhile, amidst the ongoing farm law protest continuing for months, Finance Minister Sitharaman had stated in her Budget speech that the government will be increasing the agriculture credit target to Rs. 16.5 lakh crore.

Also, the MSP regime had undergone a change in order to assure price that is at least 1.5 times the cost of production across all commodities, as stated by Sitharaman, in the event of giving assurance to the farm sector.

She further added that the procurement had also continued to increase at a stable pace, which had resulted in an increase in payment to farmers considerably. In the case of wheat, the total payment made towards farmers in 2013-14 was Rs 33,874 crore. In 2019-20 a payment of Rs 62,802 crore was made and in the year 2020-21, a payment of Rs 75,060 crore was made.

Sitharaman said that the cotton farmers saw a stunning increase in the amount that has been paid to them in 2013-14, which was Rs. 90 crores and it has been increased to over Rs. 25,000 crores in the year 2020-2021. A total of 43.36 lakh farmers has been benefited from these payments.

In Budget 2021, Sitharaman had also suggested increasing the agriculture credit target to Rs.16.5 lakh crore.

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