Transformative Financial Strategies to Propel MSME Advancement in India: Assocham
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New Delhi, Nov 28 (NationPress) To stimulate the growth of MSMEs in the nation, there is a critical need for transformative financial strategies. Furthermore, banks should enhance transparency in the loan sanctioning process and abolish unutilized credit fees, as indicated by a report published on Thursday.
MSMEs form the backbone of India's economy, contributing nearly 30 percent of GDP, 45 percent of manufacturing output, and 46 percent of exports in the fiscal year 2024.
A report by Assocham in partnership with Egrow Foundation recommends the introduction of MSME-specific bonds and mutual funds to improve financial liquidity, promotion of mobile banking services for informal micro-enterprises, and the expansion of Small Finance Banks (SFBs) to better cater to rural and semi-urban regions.
“The report outlines a strategic plan and roadmap for MSMEs as India strives to become a developed nation by 2047. The recommendations will serve as an essential resource for making informed and strategic policy decisions,” stated Assocham President Sanjay Nayyar.
“Our robust base of formal and informal entrepreneurs will require strategic backing from both the government—at the Centre and state levels—as well as banks and conglomerates to play a crucial role in achieving national goals,” he added.
The study further advocated for a reduction in the corporate income tax rate for MSMEs from 25 percent to 15 percent and proposed a simplified Goods and Services Tax (GST) framework to facilitate compliance procedures.
It also recommended reducing the TDS (tax deducted at source) burden by confining tax deductions to essential payments and establishing a unified tax system based on turnover for select MSMEs.
“Achieving the vision of Viksit Bharat will necessitate structural alterations in India’s business framework. MSMEs must be integral to this transformation. A developed India will have a vibrant role for MSMEs, and our research strongly emphasizes this,” remarked Deepak Sood, Secretary General of Assocham.
With India's nominal GDP anticipated to soar from $3.5 trillion to $22.8 trillion, the report details an expected structural economic transformation in the decades ahead.
A notable increase in per capita GDP from $2,485 to $14,000 will be propelled by an expanding and dynamic workforce, expected to reach 76.9 crore individuals by 2047.
Dr. Charan Singh, Founder of EGROW Foundation, asserted that MSMEs can tackle the challenges posed by the growing labor force due to the demographic dividend and create productive job opportunities.
“To bolster MSMEs, akin to establishing Agriculture Universities, each state could consider founding an MSME University to support local products,” Singh concluded.
