For the past decade, every year has been making a new change in how businesses operate in MSME (Micro, Small, and Medium Enterprises) sector. Particularly after the pandemic, the more offline existing enterprises have turned to become digitalized, and they are optimistic about growing this way. To help firms maintain the balance between expenditures and profits, the finance ministry of India discloses a budget statement for MSMEs each year. So, here is an overview and expectations of budget 2023.
February 1st, 2023, the finance minister of India, Nirmala Sitharaman, will disclose the budget plans for the 2023-24 fiscal year. These budget plans provide many benefits for enterprises in the industrial and service industries. However, it is transparent that budget 2023 also aims to help MSMEs become more competitive and efficient, which can benefit most businesses, considering the previous year's budget plans. So below are a few things we can expect from budget 2023.
In the last two years, the number of crypto investors in India rose to 115 million, which is 15% of the Indian population. Nevertheless, there were a few speculations that these investors might get taxed, but there are no such practices around cryptocurrency yet. However, capital gains on any other digital properties get taxed at a flat 30% which does not allow any deductions and set-offs. Yet, there are chances that budget 2023 might introduce regulatory laws for cryptos.
The PLI (Product-Linked Incentive) scheme aims to reduce imports, thereby increasing exports to entail the Make in India tagline. A part of the industry remains focused on manufacturing the goods domestically to attain the goal. So whichever company uses the domestic goods (lower expenditure) available for lower prices and shows incremental sales (more profits than assured) gets incentives from the government of India.
With this view, the Indian government may enhance PLI exposure by expanding the manufacturing industry in budget 2023. However, this feature is only available for limited corporate and larger companies. So, the new plan might include other rapidly growing MSMEs to boost exports.
This decade, many businesses are adapting to newer technologies that make their process seamless, and there is an expectation for a tax incentive on operational and capital expenditure on one such booming technology, like AI (Artificial Intelligence), ML (Machine Learning), IOT (Internet Of Things), and other technologies. The budget might include the ASSOCHAM (Associated Chambers of Commerce and Industry of India) suggestion to reduce the capital interest rate for delayed payments from 18% to 12%.
The current Indian logistics rate is around 14% of the GDP. India needs to reduce the logistics cost to approximately 10% (anywhere between 8 to 10%) to bring India to par with other developing countries. Since the NLP policy was initiated in 2022, the budget for 2023 might include cost management in the logistics industry.
Labours are essential for the country's economic development. So, with an eye for this, the Indian parliament approved four labour codes in 2020, but many state administrations are yet to implement them. So, to provide the high possible protection for labours and workers, the union government might push the state governments to embrace the labour codes. Therefore, for successful implementation, the budget 2023 might involve implementing labour codes for the fiscal year 2023-24.
The best way to expect the numbers in the future is to look back at the earlier numbers. So, the following numbers can predict the budget 2023 expectations.
The fiscal year 2020 - Micromanufacturing and services units were increased to 1 Crore INR of investment (money spent in the business) and a turnover (money gained from the business) of 5 Crore INR. It was later increased to 10 Crore INR of investment and 50 Crore of turnover.
Similarly, the limit of the medium unit was hiked to 20 Crore INR for investment and 100 Crore INR for turnover. In June 2020, the Indian government decided to elevate the upward emendation of the MSME definition. Now it will be Rs. 50 Crore of investment and Rs. 250 Crore of turnover for medium enterprises.