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This will give MSMEs extra cushion of 10 per cent for expansion or working capital improvement and improve their liquidity, says apex engineering exports promotion body EEPC India.
FM Nirmala Sitharaman meets stakeholders and experts from export, trade and industry sectors, on Thursday in New Delhi. (Photo: X/ Finance Ministry)
In a pre-Budget meeting with Finance Minister Nirmala Sitharaman, apex engineering exports promotion body EEPC India on Thursday urged the government to introduce a conditional 25 per cent income tax slab for micro, small, and medium enterprises (MSME) manufacturing units structured as partnerships, LLPs, or sole proprietorships.
This new income tax slab can come with the condition that the extra 10 percent saved must be reinvested in the business, EEPC proposed.
“This will give MSMEs extra cushion of 10 per cent for expansion or working capital improvement and improve their liquidity. This will also generate employment due to expansion undertaken by MSME units,” EEPC India said.
Sitharaman chaired her fourth pre-Budget consultation with representatives from export, trade, and industry sectors in New Delhi, ahead of the presentation of the Union Budget for the financial year 2025-26.
EEPC also recommended increasing the allocation under the Market Access Initiative (MAI) Scheme to Rs 1,200 crore to support MSMEs in participating in global trade events and fostering connections with international counterparts.
“Allocating specific funds for capacity-building programs targeting prospective exporters in interior districts and rural areas would enable them to enter international markets,” said EEPC India Chairman Pankaj Chadha.
To support MSMEs transitioning to sustainable energy practices, EEPC India suggested introducing a policy permitting 100 percent depreciation on investments in solar power generation. This would mirror previous benefits offered for wind power generation.
“This would incentivise MSMEs to reduce their carbon footprint and lower energy costs,” EEPC said.
Additionally, EEPC India called for the establishment of a transparent and effective mechanism to ensure MSMEs can access steel at affordable prices, amidst concerns that the government might impose a safeguard duty on the metal.
“The introduction of a safeguard duty on certain steel imports may increase the landed cost of steel, leading to higher domestic prices. For MSMEs, steel constitutes 60 percent of their production costs, making them vulnerable to global competition and potential job losses. While steel producers have agreed to supply steel at export parity prices, MSMEs often purchase from intermediaries like agents or distributors,” Chadha said.
Like the Federation of Indian Export Organisations (FIEO), EEPC India also advocated for increasing the cap under the Interest Equalization Scheme to Rs 10 crore, providing more substantial financial support to MSME exporters.
