In its budget recommendations, the Federation of Indian Micro and Small & Medium Enterprises (FISME) stressed the need to enhance the Special Mention Account (SMA) framework, which currently focuses on identifying stressed accounts and halting banking operations. FISME suggested expanding the framework to include guidelines aimed at reviving struggling MSMEs, addressing concerns that the current system leads to premature closures instead of offering support.
FISME also advocated for the adoption of need-based financing by banks, combining cash flow analysis with need-based assessments, and reducing stringent collateral requirements for asset-heavy MSMEs that demonstrate good financial conduct. The organization called for a reduction in collateral requirements for such MSMEs to free up resources for reinvestment, which could encourage financial discipline and growth.
In addition, FISME and other industry bodies urged the government to exempt MSMEs with turnovers under Rs 5 crore from unnecessary audits and inspections unless major discrepancies are found. They proposed a comprehensive error-forgiveness program to waive penalties for minor GST filing mistakes or delays and simplify the reinstatement process for cancelled GST registrations.
The India SME Forum also suggested integrating the Trade Receivables Discounting System (TReDS) with the GST system and the Government e-Marketplace (GeM) portal to ensure timely payments to MSMEs. This integration would allow for automatic forwarding of unpaid invoices to buyers' GST portals once the payment due date passes.
Finally, FISME highlighted the challenges faced by goods exporters, particularly MSMEs that contribute significantly to exports. They called on the EXIM Bank to lend more liberally to budding exporters, suggesting that the current condition requiring exports to constitute more than 10% of total sales to qualify for support is an illogical barrier that needs revision.
These recommendations reflect a broader push to create a supportive regulatory and financial environment that addresses the unique challenges faced by MSMEs and ensures their growth and sustainability.
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