MSME Sector Budget 2021 Expectations: Infrastructure Push To Corporate Tax Reductions, Here Are Key Demands Of MSME Sector

MSME Sector Union Budget 2021 Expectations: Finance Minister Nirmala Sitharaman has raised the Budget 2021 expectations by stating that this budget shall be ‘unlike anything in past 100 years’, and this has raised demands of every sector. Here are certain expectations from the MSME sector.

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Finance Minister Nirmala Sitharaman will table the Union Budget 2021 on 1st February 2021. As India eagerly waits for the budget after facing the pandemic, the MSME sector which suffered loss during Covid 19 has some expectations from the upcoming budget. The MSME sector was one of the badly hit industries during the pandemic. Small industries suffered a complete shutdown and lakhs of people lost their jobs. 

The sector is expecting some relief from the Union Budget 2021 and here are certain demands from industrialists that need to be addressed. 

Infrastructure Push will make India Atmanirbhar

Barnik Chitran Maitra, Managing Partner & CEO of Arthur D. Little India and South Asia. Arthur D. Little (ADL) is the oldest global management consulting firm with a 125-year track record.

According to Mr Maitra, "The government should focus on investing in building robust infrastructure and productive assets, which will be key in realizing India's self-reliance ambition. Infrastructure investment will translate into employment generation, livelihood for low- and semi-skilled workers, and demand for goods and services offered by MSMEs."

Allocation needed for Healthcare and Judicial infrastructure

Mr Maitra also said that allocation for judiciary infrastructure will result in swift justice and resolution of pending cases leading to improved investment sentiments.
The infrastructure development plan may also involve boosting health and social care. To make the country ready to deal with similar challenges in the future with higher resilience, the government must increase spending on healthcare infrastructure from the current 3.5% of GDP to at least 5% this year and target to reach the world average of 10% over the next 10 years.
The government may spend some amount on upgrading and procuring defence resources to support operational capacities amidst geopolitical tensions.

Tax rebates for goods sold at E-commerce platforms

While the year 2020 was full of challenges, it was the eCommerce platform that kept us moving and actually fulfilled our every need.  the technology brought people closer to each other and helped people to re-establish their business. 

Mr Ramamoorthy MD- Banking Solutions, International Market, APAC, FIS says, "The FinTech industry is playing a pivotal role in providing financial services to our Grassroot industries viz. Agri / MSME. Incentivizing such innovation and business focus. The e-commerce platforms have proven to be a crucial lifeline for small scale and MSME sellers during the pandemic led to slow down."

According to Mr Ramamoorthy," A certain category of goods and services sold on these platforms by MSMEs should be encouraged through tax rebates for their sustenance and growth."

Lower Corporate tax

The upcoming Budget is also expected to boost domestic manufacturing across sectors, in line with the Indian government’s focus on a self-reliant economy.  While the country is looking forward to an empowering budget this year, the MSME sector expects the budget to focus on startups and help them gain what they lost during the pandemic especially providing them with money at hand. The MSME sector also expects that the government to reduce corporate which would eventually help to increase liquidity."

Ms. Seema Prem, CEO, and Co-Founder, FIA Global says, “We are hopeful that the government focuses on capturing the lost ground on growth in FY21/22. Increased spending, putting money into the hands of people for reviving demand should be the focus rather than fiscal consolidation.

Ms Seema says, "With this budget, a lower corporate tax rate for FY 21-22 would be considered. This will help MSMEs bear the fallout of reduced business sentiment due to covid and help increase liquidity. Speaking from the investment angle, capital gain taxes and taxes on dividends should be removed to attract investments. The government should define policies for encouraging co-origination between banks/NBFCs/MFIs with Business Correspondents to enable burgeoning credit to MSME sector.”

(With inputs from Piyush Pandey)