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Budget 2019-20 brings cheer for Small and Medium Enterprises

  • Highlights

  • 2% interest subvention on incremental loans up to Rs.1 crore

  • Share of government procurement from MSMEs to increase to 25%

  • 3% government procurement to be made from women-led MSMEs

Announced on Feb 1, the Interim Budget 2019 has taken several steps to boost Small and Medium-sized Enterprises (SMEs). It has acknowledged the importance of sector in job creation and overall nation building. The budget stands-out to support domestic and retail traders and makes reforms for the welfare of the traders. However, it also subtly promotes the SMEs in their new global trade dreams, by encouraging domestic trade.

The benefits to the SME sector can be categorized into the following 3 categories:


According to the interim budget, GST (Goods and Services Tax) registered SMEs will get 2% interest subvention on incremental loans up to Rs.1 crore. Earlier in November 2018, an automated contact-less loan offer for the MSMEs was announced. The offer of “1 crore loan in 59 minutes” was announced as a part of PM Modi’s 10-point action plan. These policies are a part of the government’s 2022 New India Vision.

The biggest problem with small entrepreneurs is getting their invoices cleared. They have to go through a lengthy document verification process, to get a business loan cleared. Getting a quick loan can help entrepreneurs in managing emergencies that come in their way of business expansion. Therefore, easy and discounted loans will help small entrepreneurs in their production and expansion goals. With Bajaj Finserv Business Loans, SMEs can access finance in under 24 hours, by submitting just 2 documents. Doorstep facility along with flexible withdrawals and pre-payments further make the process of availing finance hassle-free.

Government Procurement through SMEs

The Budget states that the share of government procurement from MSMEs is increased to 25%. These procurements will happen through Government e-Marketplace (GeM). GeM is a national public procurement portal; it is a one-stop shop for all the government procurement needs. This platform is extended to all the central public sector enterprises. Since its formation, a transaction of over Rs.17,500 has already taken place through GeM.

Public Procurement through SMEs will help in the expansion of small businesses. GeM encourages smart procurement and fast-track assistance to small sellers through easy price comparison, speedy procurement and integrated procurement system. This will help small enterprises to sell their products in a transparent way.

Additional Read: How to use your business loan for expanding your business

Women-led SMEs

The interim Budget also cheered women entrepreneurs. One of its mottoes is ‘Women Development through Women-led Development’. The interim budget reserves 3% government procurement to be made from women-led MSMEs. With easy Business Loans for Women, discounted borrowings and simple government procurement procedures, budget 2019 have encouraged SMEs to embark on their business expansion journey.

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