In her Budget, Finance Minister Nirmala Sitharaman introduced new initiatives to support India's small businesses, including new funds, revitalized clusters, and improved credit access. This Budget proposal is designed to strengthen the MSME sector by reshaping the way SMEs obtain capital, access markets, and manage receivables.
The government plans to introduce a program aimed at revitalizing 200 traditional industry clusters, focusing on areas that have declined due to financial strain and obsolete technology. This initiative seeks to create jobs and rejuvenate neglected manufacturing regions.
A Rs 10,000 crore SME Growth Fund is set to be launched to expand high-potential companies. This fund will work in conjunction with incentive structures that recognize SMEs fulfilling specific criteria like productivity, formalization, and export preparedness.
To help the smallest businesses survive, the Self-Reliant India Fund will receive an additional Rs 2,000 crore. This boost is anticipated to aid micro enterprises that continue to face capital shortages even with credit guarantee programs.
The Budget further constrains the trade finance chain. The government intends to connect the Government e-Marketplace with the Trade Receivables Discounting System to facilitate information exchange, providing MSME suppliers with insight into payment cycles. In a notable change, TReDS receivables will be converted into asset-backed securities, forming a new tradable category that could release additional liquidity for the sector.