Micro, Small and Medium Enterprises (MSMEs) have played a key role in bringing digital payments to the bottom of the pyramid. In general also the MSME sector has a significant share in the employment in the country. As last year’s Budget 2022 announced some measures for Covid-affected MSMEs like ECLGS and increased budgetary allocation among others, MSME-focused fintech in budget 2023 Also sought measures like tax exemption and relaxation in credit guarantee norms.
Ketan Patel, CEO, Mswipe Technologies, said, “MSMEs have been instrumental in bringing digital payments to the bottom of the pyramid through their user-friendly transaction interfaces and innovative offerings; In addition, supported by an open API ecosystem and. QR payments are accepted by more than 30 million merchants, up 12 times from only 2.5 million merchants accepting QR payments five years ago.
He added that 2022 has been a defining year for the fintech and digital payments industry. Also, with the advent of UPI on credit, democratization of lending will become easier, and MSMEs can act as an integral medium for them.
Alok Mittal, CEO, Indifi Technologies said, “Digital lending has changed the MSME lending landscape and has driven greater inclusion. Budget 2023 should play a role in enabling digital lenders. Existing credit guarantee programs like CGTMSE and CGFMU or So are limited by an interest rate cap of 18 per cent or a minimum BBB+ rating for the underlying lender. These criteria are meant to filter out inclusion-driven youth digital lending NBFCs.”
He said that by designing such programs in line with inclusion objectives, millions of micro and small businesses would be able to access development finance. Similarly, most public sector banks have participant unit rating norms for co-lending, while the risk is on the underlying MSMEs – relaxing these unit rating norms would enable PSBs to participate more strongly in the MSME credit inclusion opportunity.
Bhavin Patel, CEO and Co-Founder, LendingClub, said P2P lending has evolved into a key investment asset class, ensuring the flow of investment from more people in need.
“While we work to meet credit demands, we need support from the government to open up the supply side by encouraging P2P lenders with tax exemptions up to a certain income. Also, it should allow write-off of bad loans, so that defaults can be treated as capital loss during return filing,” Patel said.
Last year, Finance Minister Nirmala Sitharaman had extended the Emergency Credit Line Guarantee Scheme (ECLGS) till March 2023 in the budget. In addition, the guaranteed cover was also increased by an additional Rs 50,000 crore. The total allocation under the scheme will increase to Rs 5 lakh crore. In the last budget, the Finance Minister had unveiled Rs 20 lakh crore ECLGS to help MSMEs affected by Covid.
budget 2023 demand by startups
Ankit Jain, Co-Founder and CEO of StepChange, said, “We believe the best thing the government can do for climate tech startups is to create a market for climate solutions. For this, the government should come up with detailed targets and plans for decarbonisation of the economy with appropriate resources.”
He said that in particular, the government through its nodal bodies like BEE, SEBI etc. should give clear targets and timelines for decarbonisation in the next 10 years to the big companies. The government must balance this with incentives such as green loans at low interest rates for companies that meet their decarbonisation targets.
Nero Co-Founder and CEO Aditya Kumar said, “Startups play an important role in innovation and job creation – and an important role in helping. India Realize your dream of becoming a $5 trillion economy. Thus, our primary hope from the Union Budget would be to improve various aspects with respect to taxation related to startups, for example taxing ESOPs at the time of liquidation (not the exercise); Reduction in Minimum Alternate Tax (MAT); and creating incentives for angel investors to invest in high-risk, early-stage startups (for example, through income tax offsets).”
Prerna Kalra, co-founder and CEO of Cinnamon Technologies, said with the Union Budget 2023-24 round the corner, tax relief incentives of 30 per cent are expected to expand the angel investor pool to further fund early-stage firms.
“Taxing ESOPs at the point of sale is another question raised by the industry and could be a game-changer for many budding startups. Similarly, introducing a single window for all relevant registrations can help businesses start operations quickly without any delay,” Kalra said.
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