Union Budget | Kerala MSMEs see Budget announcements as a mixed bag

The announcements in the Union Budget regarding Micro, Small and Medium Enterprises (MSMEs) ties in with the Kerala government’s ongoing push to promote MSMEs, but demands raised by MSME associations including Goods and Services Tax (GST)- related issues remain unaddressed in the Budget. Finance Minister Nirmala Sitharaman, who termed MSMEs as one of the four engines of growth, has made changes in the classification which are expected to benefit the smaller enterprises.

According to A. Nizarudeen, State President of the Kerala State Small Industries Association, the revised turnover criteria for credit guarantee cover for MSMEs is a welcome move, but the Budget has not given proper consideration to the sector.

“Along with this, the implementation of the focus product scheme in the footwear sector, is expected to generate employment and increase turnover. The interventions in the food sector and steps to promote toy making are also positive steps. But, the demands raised by MSMEs regarding GST has not been addressed. Many of our pre-budget demands including loans for MSMEs with interest rates similar to the agricultural sector and increase in the terms for the credit-linked capital subsidy scheme have been ignored,” he said.

The turnover criteria for credit guarantee cover for micro enterprises has been enhanced from ₹5 crore to ₹10 crore, from ₹50 crore to ₹100 crore for small enterprises and from ₹250 crore to ₹500 crore for medium enterprises. MSMEs, which do not have much resources have been struggling with the documentation work, even in cases where they are technically exempted from the tax considering lower turnover. The smaller companies which supply to GST-compliant larger companies have to prepare documentation. Reduction in GST rates and simplification of slabs has been another demand.