More ad spends to reduced tax burden: MSMEs applaud Union Budget 2023's new credit scheme

The Union budget 2023-2024 presented by Nirmala Sitharaman on Wednesday came in a new ray of hope for MSMEs and the retail sector, who are quite optimistic about the new measures announced by the government. Experts and industry leaders think the new steps will also help in increasing the marketing budget of these companies, in turn helping with the growth of the sector, especially after being dealt a blow during the pandemic. 

According to the Economic Survey 2022-2023, the credit growth to the Micro, Small, and Medium Enterprises (MSME) sector has been remarkably high, over 30.6 per cent, on average during Jan-Nov 2022.

Under the budget presented for 2023-2024 from Narendra Modi’s government, there will be a revamped credit guarantee for MSMEs which will take effect from Apr 1, 2023, through an infusion of Rs 9,000 crore in the corpus and the scheme will enable additional collateral-free guaranteed credit of Rs 2 lakh crore and reduce the cost of credit by 1%. The retail market thinks it is a positive sign for the industry.

Sigh of relief 

Vidit Aatrey, Founder and CEO at Meesho believes this scheme will help the sector to bounce back from pandemic lows. "It is heartening to see the government’s continued thrust on supporting the MSME sector. The infusion of Rs 9,000 crore in the revamped Credit Guarantee Scheme, enabling collateral-free guaranteed credit of Rs 2 lakh crore, will help address the working capital issues of small businesses. Our 6.3 crore MSMEs, which collectively employ nearly 11 crore people, have been able to bounce back from the pandemic on the back of similar proactive interventions in the past and this step will further hasten their recovery. Meesho is committed to working closely with the government towards making our MSMEs competitive and self-reliant."

Abhay Batra, Co-Founder & CFO, Clovia talks about how this budget will help smaller businesses to grow and how it positively impacts Clovia’s growth plans. “Budget 2023 is positive and balanced with a strong focus on a prosperous and inclusive India. It is encouraging to see that key pillars of growth include skilling and job creation, opportunities and reduction of compliance burden for small entrepreneurs, and the empowerment of women entrepreneurs.

"The reduced tax burden for small entrepreneurs will mean reduced supply-chain costs and hence more competitive markets. This will help Clovia's initiatives from day 1 of its existence of incubating small and medium manufacturer entrepreneurs to build their technical expertise, develop products and create sustainable revenue streams for themselves. The reduced individual tax burden will mean higher disposable income; this is a welcome step for the retail industry as a whole. Steps like carry forward of losses for start-ups in case of shareholding, the extension of date of incorporation amongst other steps is a step forward for the start-up ecosystem."

Meet Jatakia, Director of Branding & Marketing, Cossouq says that the reduction in the cost of credit will help with sourcing funding. “With their intention of reducing compliance and decriminalization of legal provisions, the budget has taken positive steps towards encouraging development in the startup and MSME ecosystem. The Rs 9,000 crore corpus set to take action through the revamped schemes for MSMEs is an important benefit to come out of the 2023 union budget. Further, the cost of credit reduced by nearly 1% will decrease start-ups’ initial funding fixed cost, encouraging them to source funds from the government or banks.”

Budget to help MSMEs increase ad spending

Indranil Dutta, Vice President, Insights Division, Kantar says the measures announced for the sector will positively affect its marketing spends. “Indian MSMEs are the backbone of the Indian economy. We have noticed in Kantar ITOPS 2022, MSMEs are quite upbeat in terms of their spending and business growth as are confident about the Indian economy doing well. Today’s budget has come as a huge boost to the MSME sector and is expected to loosen up their cash flow. This essentially means that they will have more money in their marketing kitty to wisely spend on. Considering the extremely competitive environment they are in; they would like to spend on advertising to attract more customers. Today’s budget announcement will further help them on their ad spending which otherwise would have pinched.”