Support for Small and Medium Enterprises (SMEs)
Union Finance Minister Nirmala Sitharaman has announced several initiatives aimed at improving liquidity and support for SMEs, particularly through a dedicated fund and enhanced mechanisms for trade receivables.
SME Growth Fund
- Rs 10,000 crore SME Growth Fund: Aimed at ensuring timely payments to SMEs and creating future champions by incentivizing enterprises based on select criteria.
- Self-Reliant India Fund: An additional Rs 2,000 crore will be provided to continue supporting micro enterprises and maintaining their access to risk capital.
Trade Receivables Discounting System (TReDS) Platform Enhancements
- Mandating TReDS as the transaction settlement platform for purchases made by central power sector companies from MSMEs.
- Introduction of a Credit Guarantee Support Mechanism (CGTMSE) through the credit guarantee fund trust for MSMEs, facilitating invoice discounting on the platform.
- Linking Government E-marketplace with TReDS for information sharing with financiers about government purchases from MSMEs, encouraging cheaper and quicker financing.
- Introduction of TReDS receivables as tradeable asset-backed securities.
Neermoy Shah from India Ratings & Research emphasized that enhancing CGTMSE is supportive but its impact depends on improved receivable flows, which TReDS will facilitate.
Professional Help for MSMEs
The government plans to make affordable professional help available for MSMEs to comply with regulatory requirements. This will be achieved by:
- Facilitating institutions like the Institute of Chartered Accountants of India to design short-term modular courses and practical tools.
- Developing ‘Corporate Mitras’ to assist MSMEs, especially in Tier-II and Tier-III cities.
Reducing Regulatory Burden on MSMEs
The Comptroller and Auditor General (CAG) highlighted the need for a strategy comprising Simplification, Digitalisation, Decriminalisation, and Elimination of redundant laws to enhance MSMEs' competitiveness.
