Pre-Budget Expectations 2025: MSMEs Seek Innovation And Growth-Focused Reforms

As we look ahead to Budget 2025, reforms in the MSME sector are expected to come in order to raise its global standing and competitive edge. With regard to the global market, several interventions are sought that would assist with innovation, ease of access to finance, and digitalization. Most crucial, MSME's appeal is that pumping more money into technological advancement will lead to more competitive growth.

"Given the overabundance of cutting-edge digital tools, the MSME sector's journey towards digital transformation will necessitate government intervention. We appreciate and look forward to the budget allocating specific measures to promote technology use in AI and machine learning among other sectors. If a separate pool of resources were assigned for the purpose of conversion in technologies, the MSMES would greatly benefit," shared Delphin Varghese co-founder & chief revenue officer, AdCounty Media.

The education industry, which is intertwined with MSME growth via skills development, is also in need of some critical reforms. Mamta Shekhawat, Founder, Gradding.com, asserts: "The current TCS rates on overseas education remittances put a lot of strain on the finances. If these rates are brought down, along with generous spending on need-based grants and subsidized interests for education loans, international education would become easier to afford while the rest of the population remains talented enough in India."

Investment in new trends such as technological improvement is still one of the main priorities for growth in the industry. "MSMEs require some structural measures in the process of assimilation of technology. In the budget, we look for innovation vouchers and technology upgrade funds which could cover 50% of the cost of digital transformation for MSMEs. This would help stimulate the use of cutting-edge technologies and enhance productivity," Saurabh Tyagi, CEO & Co-Founder, PropChk , notes.

The ability of the sector to attract finance still remains one of the major drag factors. New ways of financing and additional credit lines could be useful tools for addressing this challenge and the coming budget is expected to alleviate this situation. Through alternative lenders, fintech's and easier compliance requirements, the working capital barriers faced by MSME could be greatly reduced.

"There should be increased financial support in the design and technology sector, especially for the companies that are enhancing the digital user experience. This can be accomplished by targeting funding for the UI/UX industry or credit guarantees that address the distinct challenges of design-oriented MSMEs. It is expected that efforts will be made towards encouraging companies that focus on user experience and tools for digital transformation, as there is a huge void in design innovation and execution. The estimated credit gap of ₹20-25 lakh crore is more pronounced, particularly in design technology firms that are focused on the interface level solutions for businesses," said Kishor Fogla, Founder, Yellow Slice.

When it comes to being competitive on the international front end, the industry considered the promulgation of infrastructure policy proposals combined with financing support to serve additional investment requirements,and simplification of compliance structure, as pivotal factors. Approach to assist MSME's with respect to their inclusion in global value chains would necessarily have to merge coordinated efforts to maintain the required level of quality and certification for universal market access.

Another requirement is to set up technology and innovation centres in second and third-tier cities, strengthen the skill sets of the MSME sector, and synergetic zones around the MSME business clusters. All these actions, as a whole, will make the MSME sector more sustainable and diversified.

The Union government has an opportunity to consider addressing the tactical issues while ensuring stability and sustainability of growth at a macro level for the MSME sector. MSMEs have always been the backbone of employment and income generation for the Indian Economy and despite facing a plethora of challenges, they have seamlessly demonstrated resilience.

It is expected that MSME initiatives at a national level and at the Union level remain central to creating a positive impact across verticals within the economy since this sector plays a critical role in backlinks to many industries and in terms of output creation for manufacturing and exports. Hence the key consideration has always been how to design and structure the economy to ensure the MSME sector in India is able to innovate compete and grow sustainably.