MSMEs seek better credit access, protection from tariff shocks, exchange rate risks, Pg13

Key Highlights:

• MSMEs are requesting measures in the Union Budget 2026-27 for better credit access and protection from tariff shocks.
• The Association of Indian Entrepreneurs (AIE) has requested collateral-free lending up to Rs 1 crore for micro enterprises with a 6-7% interest cap.
• MSMEs are seeking simplified GST compliance, including higher exemption thresholds and simplified returns for micro units.
• AIE is advocating for a forex fluctuation protection scheme to shield micro enterprises from exchange rate shocks.

Detailed Insights:

• MSMEs face challenges due to policy asymmetry, external shocks, and structural neglect, impacting their ability to contribute to domestic manufacturing.
• The call for interest-free loan assistance aims to encourage import substitution and reduce reliance on foreign products.
• Proposed measures include temporary duty drawback enhancement and interest relief during tariff shocks to stabilize MSME operations.
• The request for time-bound GST refunds within 15 days with statutory interest seeks to improve the financial liquidity of MSMEs.
• MSMEs are also asking for complete decriminalization of procedural lapses and a unified annual compliance return to ease regulatory burdens.
• The suggestion for RBI to consider simplified hedging instruments with subsidized costs aims to protect micro units from exchange rate fluctuations.

Key Concepts Involved:

• MSME: Micro, Small, and Medium Enterprises, which are vital for economic growth and employment.
• GST: Goods and Services Tax, an indirect tax levied on the supply of goods and services.
• Tariff Shock: Sudden increases in import duties that can negatively impact exporters.