A country’s economy do not only depends on the larger enterprises alone. The small scale enterprises including the medium and the micro enterprises (MSME) also play an important role in the nation’s development.
India has a larger number of these kinds of enterprises. However, all these enterprises are not lucky enough to taste success. Most of these enterprises have to undergo a heavy amount of loss due to various reasons and finally they get shut down.
Here is the list of four factors that the Indian government will adopt in the future to encourage the growth and progress of the MSMEs as reported by ‘yahoo’.
1. Encouraging the growth of the MSMEs
Most of the micro, small and the medium enterprises fail to grow due to the fear of bearing losses in the market. Their main obstacle is the ‘investment’. They are not strong enough to invest a huge amount of money for a longer period of time, expecting profit.
To overcome this, the government has proposed the non-tax benefits for the MSMEs in this year’s budget. Once an MSME qualifies to the next higher category, it can take advantage of this non-tax benefit for three years.
2. Extended alimony to the MSMEs
The capability of Small Industries Development Bank of India (SIDBI) has been raised to 10,000 crore from 5,000 crore. From this amount, 100 crore will be vested on the India Microfinance Equity Fund.
This year’s budget will allot 500 crore to the Small Industries Development Bank of India as Credit Guarantee Fund for distributing.
3. Including the MSMEs on the SME Exchange
All the MSMEs will be included in the Small and Medium Enterprise (SME) Exchange. The MSMEs would not have to make any offers in the public. Like the large scale enterprises, they will also get an extended number of investors. However, the inclusion of the MSMEs in the SME exchange will be kept limited to certain categories of investors.
4. New Investment
From the new investment grant for new high value investments, the Finance Ministry has estimated “enormous spill-over benefits to small and medium enterprises”. The Budget recommends that any company investing Rs 100 crore or more in plant and machinery from April 1, 2013 to March 31, 2015 will be allowed to subtract an investment allowance of 15 percent of the investment. This will be subjected to the existing rates of depreciation.