How aggressive is this budget for SMEs? | SupportBiz

Policy Notes

How aggressive is this budget for SMEs?

While some believe that the Union Budget 2013 is encouraging for the SME segment, some experts and stakeholders opine that it is not an aggressive policy document.

The Indian government has reiterated its support to SMEs by announcing special plans that would facilitate the growth of this community.

Certain announcements like the one that small and medium companies can now list on the MSME Exchange are very positive. 

Financial programmes like raising the refinancing capacity of SIDBI to  Rs.10,000 crore, offering a sum of  Rs.100 crore to the India Microfinance Equity Fund and a corpus of  Rs.500 crore to SIDBI to set up a Credit Guarantee Fund for Factoring can play an instrumental role in the growth of the SME sector in the near future.

“It is imperative for the government to focus on creating policies around a uniform taxation scheme for  SMEs. GST should be one of the priorities for the government. Allocation of a sum of Rs.9,000 crore towards the first instalment of the balance of CST compensation to the states is a positive step in this direction. With a majority of the state governments having agreed to the need for a constitutional amendment, it is imperative for the central government to now pass the GST bill within a clearly defined timeline,” says R. Narayan – founder and CEO, Power2sme

“Additionally, a clustering approach for similar SMEs is the need of the hour, as  this will  create an ecosystem that facilitates growth,”he says.

“The budget is a step forward towards the growth of  SMEs. However, I believe a lot more needs to be done to maximize the growth of the SME industry,” says Narayan.

Samir Bodas, CEO, Icertis,  says, “Amidst the constraints of the current economic condition of the nation, the budgetary move for giving special consideration to start-ups and SME’s to promote innovation in the country is welcome. However, it fails to address some of the major concerns of the IT industry.  There has been no roll-back of taxation on software treated as royalty.There is a dual levy of VAT and service tax on domestic software sales, and a reform is needed in the transfer pricing norms for the sector.”

The current requirements of our country  are  the revival and sustenance of  the growth rate.The budget, however, has focused on arresting further fall rather than inducing growth.

V Laxmikanth, Managing Director, Broadridge Financial Solutions, says, “CAD seems to be on top on the Finance Minister’s agenda, as  he has recognized it to be the biggest concern,though he has not dealt  with it  in detail., He has emphasized on  foreign investments and the ECB route to bridge the USD75 billion gap.”

Laxmikanth also  says, “It was very motivating to see the government recognizing the need to give a boost to the start-up/incubation ecosystem.  The announcement of expenses/investment made on incubators qualifying as a CSR spend, and hence eligible for rebates, will bring in an enhanced support from the industry towards encouraging innovation. This is a very innovative move, considering that it is tied to the initiative being recognized as CSR by the government and yet leading to investments in the product arena.”

Industry veterans believe that steps like widening of the tax base were imperative.   On the housing front, the increase in exemption is a positive move.  The Finance Minister’s  focus on women welfare and development through a series of interesting initiatives like the introduction of a women-oriented bank along with suitable allocation is another welcome move.