The Micro, Small and Medium Enterprises (MSMEs) sector's primary challenge of credit unavailability has been addressed with a proposal to set up a Rs 5,000-crore venture fund.
The Finance Minister, Mr Pranab Mukherjee, said that the financing available under the proposed ‘India Opportunities Venture Fund' will be routed through the Small Industries Development Bank of India.
To augment funds for SMEs, exemption from capital gains tax on sale of a residential property has also been proposed, if the funds raised are used for subscription in equity of a manufacturing company for purchase of new plant and machinery.
“SMEs are the building blocks of our economy. They rely primarily on loans from banks and informal sources to raise capital. To enable these enterprises greater access to finance, two SME exchanges have been launched in Mumbai recently,” Mr Mukherjee said.
It has also been proposed that the SMEs' turnover limit for compulsory tax audit of accounts as well as for presumptive taxation be raised to Rs 1 crore from Rs 60 lakh.
Additionally, for increased market access, the Government has approved a policy which requires Ministries and central public sector firms to make a minimum of 20 per cent of their annual purchases from MSMEs. Of this, four per cent will be earmarked for procurement from firms owned by SC/ST entrepreneurs.
The sector employs 59.7 million persons spread over 26.1 million enterprises. In terms of value, MSMEs account for about 45 per cent of the manufacturing output and around 40 per cent of the total exports of the country.