A Vikram Joshe, Managing Director of WAE Ltd, has outlined key expectations from the Union Budget 2025 to strengthen the SME sector, which serves as the backbone of India’s industrial and economic growth. He emphasized the need for plug-and-play industrial zones tailored for SMEs, a reformed GST payment mechanism, and an improved CGTMSE scheme to alleviate financial challenges.
“Small and Medium Enterprise-oriented ‘plug-and-play’ industrial zones are what the industry needs, along with a pragmatic CGTMSE scheme and a reformed GST payment mechanism,” Joshe stated.
He highlighted the liquidity strain caused by the existing GST structure, where SMEs are required to remit taxes before receiving payments from buyers. “A proposed amendment to transfer GST liability to the buyer would alleviate these challenges, ensuring that SMEs retain adequate cash flow to sustain operations,” he added.
Addressing funding constraints, Joshe called for expanding and reforming the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme, shifting from arbitrary turnover caps to performance-based eligibility criteria. “Despite tall promises, SMEs still face collateral demands and restrictions from financial institutions. A shift toward performance-based eligibility is necessary to unlock growth potential,” he noted.
Another pressing issue is delayed payments under the MSMED Act, where government agencies and public sector enterprises remain among the largest defaulters. Joshe advocated for stringent enforcement mechanisms, including penalties for non-compliance and real-time payment tracking systems, to ensure fiscal discipline and liquidity in the SME value chain.
With the Union Budget 2025 on the horizon, SMEs anticipate policy changes that will streamline operations, ease financial pressures, and position India as a competitive global manufacturing hub.
