Finance minister Nirmala Sitharaman has announced various schemes to strengthen the macro, small and medium enterprises in the Union Budget for the fiscal year 2019-2020. Pensions for retail traders, proposal to create payment platforms and interest subvention on 59-minute loans were among the key proposals included in the Budget for the MSMEs. Here are the key takeaways for the MSME sector from the Budget:

Pradhan Mantri Karam Yogi Maandhan Scheme

FM Sitharaman has announced a pension scheme for retail traders who have annual turnover below Rs 1.5 crore. The new scheme will be called Pradhan Mantri Karam Yogi Maandhan Yojana and the government would look to target 3 crore retail traders in India under the scheme. To avail the same, Sitharaman said that Aadhaar and a bank account will be mandatory and and rest will be on self-declaration.

Interest subvention scheme

The government has allocated Rs 350 crore under the scheme for FY 2019-20 for 2 percent interest subvention for all GST registered MSMEs on fresh or incremental loans. The scheme is expected to benefit about 20 percent of MSMEs.

Payment platform for MSMEs

The government has proposed to create a payment platform for MSMEs to enable filing of bills and payment on the platform itself to eliminate delays in government payments.

"Government payments to suppliers and contractors are a major source of cash flow, especially to SMEs and MSMEs. Investment in the MSME sector will receive a big boost if delays in payment are curbed," said Sitharaman.

SFURTI

Under the scheme of fund for upgradation and regeneration of traditional industries (SFURTI), the government plans to set up 100 new clusters during 2019-20 enabling 50,000 artisans to join the economic value chain. It will also set up Common Facility Centres (CFCs) to facilitate cluster-based development to make traditional industries more productive, profitable and capable of generating sustained employment opportunities. Bamboo, Honey and Khadi clusters are among the focused sectors.

Customs duty hike/exemption withdrawal

The government, to provide domestic industry a level playing field, has hiked basic customs duty on items such as cashew kernels, PVC, Vinyl flooring, tiles, metal fitting, mountings for furniture, auto parts, certain kind of synthetic rubbers, marble slabs, optical fibre cable, CCTV camera, IP camera, digital and network video recorders etc.

The government has withdrawn exemptions from customs duty on certain electronic items which are now being manufactured in India; end-use based exemptions on palm stearin, fatty oils; and exemptions to various kind of papers.

“My proposals are driven with the objectives of securing our borders, achieving higher domestic value addition through make in India, reducing import dependence, protection to MSME sector, promoting clean energy, curbing non-essential imports, and correcting inversions,” said Sitharaman.