CLEAR TAX

MSME

The next phase of ease of doing business and living will be launched.

To support sectors disproportionately affected by the pandemic, FM announces extension of ECLGS

till Mar-23. Given that nearly 95% of ECLGS borrowers are MSMEs, this measure will ensure the
continued handholding of MSMEs and the services sector. The services sector, which accounts for
more than 60% of India’s GDP, remains an important engine of economic growth, job creation,
income generation and livelihood support.

The extension of ECLG will provide a boon to lending to the MSME sector. Simultaneously, the
revamp of CGTSME will be an added incentive for banks to extend lending: SBI’s Soumya Kanti
Ghosh.

Experts say ECLGS (emergency credit line) extension till March 2023 is a critical step.

The govt took measures to make MSMEs more resilient and competitive.

Emergency Credit Line Guarantee Scheme has helped 130 lakh MSMEs mitigate the worst impact of
the pandemic.

On Tuesday, 1 February 2022, Union Finance Minister, Nirmala Sitharaman,

presented the Union Budget 2022, a day after the Economic Survey 2021-2022
was released.

Hailed as a budget that addresses the physical, social, and digital infrastructural
needs of the country at this moment, the Honourable Finance Minister said the
budget lays out India’s development trajectory for the next 25 years, officially
named “Amrit Kaal”.

Below are the key highlights from the 2022 Union Budget that impact the MSME
sector.

Highlights of the Union Budget 2022 for the

MSME sector
Infrastructure
 Proposed increase in capital expenditure to Rs 7,50,246 crore, a 24.5%
increase over the revised estimates of 2021-2022.
  PM Gati Shakti National Plan – A unified logistics platform comprising of
integrated road, railway, airport, port, mass transport, waterway, and postal
infrastructure for hassle-free delivery of material and packages.
 Development of 100 new cargo terminals over the next 3 years.
 Proposed linkage of the Udyam, e-SHRAM, NCS, and ASEEM platforms.
 Improving the ease of doing business in Special Economic Zones using a
fully IT-driven customs process on the Customs National Portal.
 Proposed digitization of the public procurement process, starting with e-
billing and e-payments.
 ‘One Station – One Product’ will be promoted to help local businesses &
supply chains.

Credit
 Extension of the Emergency Credit Line Guarantee Scheme (ECLGS) to
March 2023, and expansion of guaranteed coverage to Rs. 5 lakh crores.
This includes a special earmarked expenditure on hospitality and related
enterprises. This scheme has provided additional credit to more than 130
lakh MSMEs so far.
 Proposed revamp of the Credit Guarantee Trust for Micro and Small
Enterprises (CGTMSE) with an additional credit of Rs. 2 lakh crores to
expand employment in the sector.

Taxes and Domestic Production

 Extension of the eligibility period to claim profit-linked tax exemptions for
eligible start-ups to 31 March 2023.
 An extension of 1 year on the concessional tax rate of 15% to domestic
manufacturing companies starting manufacturing or production by 31
March 2024.
 Customers duty on S.G. Ingot Castings, Call Screw, and Linear Motion
Guide used in the manufacturing of Plastic Processing Machinery to be
reduced from 10% to 7.5% and 7.5% to 5% respectively.
 Extension of exemption on steel scrap for one more year.
 Duty on single or multiple loudspeakers, headphones, and earphones to
be increased from 15% to 20%.
 Duty on smart meters increased to 25%.
 Duty on printed circuit boards used in the assembly of smart meters
increased to 20%.
 Customs duty on Solar Cells increased to 25%.
  Customs duty on Solar Molecules increased to 40%.
 To promote agricultural implementation tools being produced in India,
reduced exemptions on imported implementation tools used in the
agricultural sector has been proposed.
 Phasing out the concessional rates in capital goods and project imports
and applying a moderated tariff of 7.5% to support the domestic industry.
 Additional Rs 195 billion was allocated for production-linked incentives of
solar equipment manufacturing.
 Unblended fuel to be taxed an additional differential duty of Rs. 2/Litre from
1 October 2022.

Financial Inclusion
 Announcement of the Central Bank Digital Currency to be built on
blockchain, to be issued be by the Reserve Bank of India starting 2022 –
2023.
 Launching 75 new digital banking units.
 Proposal to bring 1,50,000 post offices under the core banking system to
improve digital banking, provide seamless banking services, and improve
last-mile connectivity in the banking system.

Skills Development
 RAMP – Proposing the Raising and Accelerating MSME Performance
Program with an investment of Rs. 6,000 crores over the next 5 years to
make the MSME sector efficient, competitive, and resilient.
 DESH Stack e-Portal – Digital Ecosystem for Skilling and Livelihood to be
launched for skilling, upskilling, and reskilling of the workforce.
 Proposed revamping of 2 lakh Anganwadi centres by the Ministry of
Women and Child Development.

Areas of Opportunity
 68% of the capital procurement budget in Defence has been earmarked for
the domestic industry.
 25% of the Defence R&D budget has been earmarked for domestic
industry, start-ups, and academics.
 Introduction of the Battery Swapping Policy to help MSMEs operating in
the Electric Vehicle space.
 Drone Shakti – Proposed usage of Drones-as-a-Service in the agricultural
sector and upskilling in this space.
 Kisan Drones’ to be promoted for crop assessment, digitisation of land
records, and crop management. 
 A PPP scheme to be launched which focuses on offering digital and hi-
tech services to farmers.
 Proposal to establish the National Digital Health Ecosystem.
 Proposal to launch the National Tele Mental Health Program this year for
accessible mental health counselling.