Centre Plans More Measures to Support Small Businesses

Govt is also looking at a credit guarantee scheme, besides a second window for TReDs to allow small transactions

- Puja Das & Rituraj Baruah

The government is looking at a second window for the Trade Receivables Discounting System (TReDs) to allow transactions of as low as ₹1-10 lakh, two officials said on the condition of anonymity.

It is also looking at including a credit guarantee scheme into it, the officials added.

The second window will also allow banks to access digital data of MSME suppliers, including their names, GST details and goods supplied to a particular buyer in the last 2-5 years.

This is aimed at addressing the problem of banks being uninterested in discounting bills of small value as it involves higher costs, and encouraging small enterprises to take risks and grow their businesses.

Some leading companies do not pay MSMEs against their supplies and use MSMEs' credit as their working capital instead of taking working capital from the banks.

The government in last year's budget added a new clause under Section 43B of the Income Tax Act to address the challenge of delayed payments faced by MSMEs in the country.

The new TReDs will be on top of the existing one.

The MSME sector, with over 63 million enterprises, has emerged as a highly vibrant and dynamic sector of the Indian economy, fostering entrepreneurship and generating employment opportunities at comparatively lower capital cost, next only to agriculture.