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Budget 2019-20: 'Make in India’ initiative gets a major boost

  • Highlights

  • GST exemption doubled for small businesses

  • Interest subvention of up to 2% for loans up to Rs 1 crore

  • Govt procurement from SMEs to increase to 25%

  • ‘Make in India’ initiative to get major boost

The manufacturing sector has been recognised as one of the high growth sectors in India by the Government of India. Through policy initiatives such as “Make in India”, the Government harbours ambitions of India securing a position among the top 5 manufacturing countries in the world.

Pledging its support to the manufacturing sector in the Interim Budget for FY19-20 announced on February 1st, the Government focussed on the needs of small businesses in particular, by reducing the tax rate to 25% for companies with a turnover of up to Rs. 250 crore, that is also applicable to new manufacturing units. This will provide a shot in the arm to small businesses setting up manufacturing units for the first time.

The Ministry of Finance also announced a slew of measures to benefit the manufacturing sector:

1. Interest subvention of up to 2% for loans up to Rs. 1 crore. This is applicable to all MSMEs that are registered under the Goods and Services Tax (GST) network. This will provide better credit access to MSMEs.
2. Increase in the requirement of sourcing from SMEs by Government enterprises through Government e-marketplace to 25%. Of this, the material to the extent of at least 3% to be sourced from women-owned SMEs. This will provide an opportunity for small business owners to sell their products in a transparent and effective manner.

3. Introduction of digitisation for export/import transaction and leverage of RFID technology for improving export logistics. This will improve the efficiency of export logistics and automate processes.
4. The vision of creating 1 lakh digital villages over the next five years which is expected to benefit mobile and mobile accessories manufacturing companies under Make in India. This will also provide a larger scope of job opportunities for the digitally inclined youth of the nation.
Also read: Tips To Expand Your Manufacturing Business

5. Doubling of exemptions from GST for small businesses from Rs. 20 lakh to Rs. 40 lakh. This provides an opportunity for the smallest traders to carry out their businesses with benefits under the unified GST regime.
6. Extension of the facility of composition scheme to all manufacturers and service providers with an annual turnover of less than Rs. 50 lakhs, wherein the GST threshold is reduced to 6% instead of 18% individually. This will reduce the burden on individual manufacturers and service providers and incentivise them to consider a composite scheme.

The implementation of Goods and Service Tax has already laid the bricks for a unified market with the potential of ranking among the top five manufacturing destinations of the world. In its interim budget today, the Government simplified the GST structure further that now makes it easier for smaller businesses to comply with the taxation norms. Further with an impetus on developing digital villages, smart cities, the Government reiterated its commitment towards the holistic development of the sector.

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