What Franchisors and the SME Industry Expect from Budget 2024
Beny Sachdeva
Jul 22, 2024 -
5 min read
As we delve into the key expectations and demands of the industry experts. Access to affordable credit remains a top priority for both franchisors and SMEs. Industry stakeholders are looking forward to:
The wishlist for Gaurav Marya, Chairman, Franchise India however covers multifaceted expectations for industry’s growth, he mentions, “We are optimistic that Finance Minister will recognize the contribution of MSME sector of India. In recent years, MSMEs have been finding loans less accessible and expensive. MSME industry would be benefitted by increase in the limits of loan under MUDRA Yojana, as well as in credit guarantee cover for unsecured loans. Current limit of loan for MSMEs under Pradhan Mantri MUDRA Yojana is Rs 10 lakh which the industry is expecting to be doubled to Rs 20 lakh. Similarly the sector would benefit if Finance Minister could increase credit guarantee cover by Rs 3 Crore for unsecured loans to the MSME sector and take it to Rs 5 Crore from Rs 2 Crore at present. ISFA strongly feels that such changes would help MSMEs to maintain their cash flow at crucial times and unburden themselves from loans available through other sources which have very high and unrealistic rates of interest.
For Bharat's journey to become a 5 trillion US$ economy, will be marked by digital advancements and Ease of doing business specially for MSME sector, and a robust trade ecosystem. A special Package for skill development & technology up-gradation for MSME’s is the order for the day but here MSME owners are crippled by both capital and knowledge. Incentivising the MSME to adopt technological practices and shift towards digital will be better for the economy in the long run. Launch of New Schemes, tax incentives, regulatory clarity, and promoting financial literacy will empower MSME's . Additionally, ensuring sustainable growth through environmental, social, and governance (ESG) investments can further strengthen the sector”
Insights from the Travel Industry
As India’s travel industry is booming, we spoke to Madhavan Menon, Executive Chairman of Thomas Cook (India) Limited (Thomas Cook, SOTC, Sterling Holidays, and TCI). According to him, “The Travel & Tourism sector represents a vital economic driver: The World Travel & Tourism Council (WTTC) projects that Travel & Tourism will contribute almost INR 21.15 trillion to India’s GDP in 2024, a marked 21% above 2019 levels. With jobs predicted to increase by 2.45 million this year, this represents one in every 11 jobs in the country. India’s Travel & Tourism sector represents a strong force multiplier across allied sectors, employment generation, and foreign exchange receipts. Our expectations from the Union Budget include key pivots to transform India into a destination of choice, the government should focus on infrastructure, setting up new airports via private participation to create a viable hub & spoke model, and expanding rail, road, and waterways (sea and river cruises). Additionally, infrastructure development for high-growth areas like religious circuits and under-leveraged hidden gems (Lakshadweep) is crucial. For inbound tourism, the revival of the inbound incentive scheme for select destinations is necessary.”
Income Tax & GST
Income Tax and GST are key areas of interest. Discussing the wishlist for Budget 2024-25, Menon anticipates, “The Government must prioritize reducing income tax levels to provide increased disposable income, boosting travel & tourism spends. Annual LTA exemptions, against the current biennial exemption, can catalyze domestic tourism. We recommend lowering TCS to 1%, or standardizing it at 5% on foreign travel packages, instead of the current 5% and 20% slabs. Clarification on the applicability of Section 194O on e-commerce is crucial, as it defeats the government’s focus on Digital India and ease of doing business. Section 53 of GST should exempt travel agents, as airlines already discharge tax on their sales. Clarity regarding TCS on forex card payments is also needed.”
GST System Enhancements and Integration of E-Invoicing and E-Way Bills
Hoping for enhancements in the GST system and better integration of e-invoicing and e-way bill systems, Ratish Pandey, Business Coach & Founder of Ethique Advisory, says, “I anticipate that the current Government will priortise on policies that support the masses. The upcoming budget in my view will likely to focus on continued support to the infrastructure & agricultural sector. With inflation under control the RBI may adjust t fiscal policies and also tinker with the interest rates. However, funding challenges remain prevalent for the startup sector. The MSME sector actually contributes 30% to the national GDP, but this sector continues to face significance headwins especially on the retail side of things. The MSME Entrepreneurs face two key charges, i.e Cash Flow & the Ease of doing business. It would really be beneficial if the upcoming Union Budget includes the provisions to encourage improved IT Infrastructure for MSMES. This would enable MSMES to invest in tech tools like CRM, ARM, Supply chain investments. On the ease of doing business, improvement on GST systems, Integration of E-Invoicing and E-Way Bill Systems, as well as provision of softer loans for fiscal relief under the Income tax Act for investment in buying new plant machinery should be considered.”
Economic Growth and Social Development
Sharing his thoughts on Union Budget expectations, Ameet Venkeshwar, CBO of LoanTap, says, “In the upcoming Union Budget FY25, we expect the Government's commitment to be more towards economic growth and social development. The fiscal deficit numbers are expected to be aligned with the targets set around 4.9% to 5.1% of GDP without compromising on capital expenditure. We expect measures to increase liquidity in the system. Tax relief measures, especially for the low-income group, may be implemented to increase their spending power and stimulate the economy. Additionally, there may be an increase in standard deduction slabs for salaried taxpayers, who are key to driving India's economic progress and achieving long-term prosperity.”
