The MSME economic package may turn out to be beneficial for some startups


Finance Minister Nirmala Sitharaman, on Wednesday, delivered the much-awaited economic package, bringing aid to the MSME sector, one of many worst-hit in the course of the pandemic within the nation. Some of the notable measures introduced included Rs three lakh crore collateral-free automated loans, Rs 20,000 crore subordinate debt, and revised definitions of MSMEs.
While the advantages may not be relevant for startups, lots of them catering to the SME sector have welcomed the transfer and imagine the measures will assist streamline their operations.

Delhi-based Shiprocket, a data-driven logistics aggregation platform has been serving to small companies by offering them quicker supply of products by way of its automated transport software program. According to Saahil Goel, CEO and co-founder Shiprocket, the measures introduced by the Finance Minister will let many small companies resume operations and would in turn influence Shiprocket’s operations positively.

“The collateral-free automatic loan will allow small businesses to bounce back from the pandemic’s impact. The economic stimulus will help many SMEs resume operations by providing access to credit to help overcome near term loss of income. This will help businesses like Shiprocket, which enable SMEs to also grow and maintain business continuity. The long term focus on enabling SMEs with technology also provides a great opportunity for our business,” he stated.

Pushkar Singh, CEO and co-founder of logistics startup LetsTransport, shares the identical ideas because the package aid will enable motion of products and providers benefitting the logistics sector.

“The Rs 20 lakh crore economic package announced by the Prime Minister is a morale booster in itself. Living with the new normal and the reforms are going to be game-changing for the supply chain industry. The majority of logistics is dependent on the manufacturing sector, these options announced by the government will allow them to resume operations and thus resuming the movement of goods which in turn will be beneficial for the logistics industry too,” he stated.

Apart from logistics, startups resembling CommerceIndia had additionally taken to present a B2B market for MSMEs, connecting consumers and suppliers and serving to SMEs go digital. Lauding the measures introduced by the Minister, Sandip Chhettri, COO, CommerceIndia was additionally impressed by the federal government’s mission to go native as he believes this may encourage manufacturing and scale back the nation’s dependence on imports.

“Two other key issues facing the sector are addressed as well. First, complaints are often raised that in the government procurement process MSMEs often face unfair competition from large foreign companies, and therefore now global tenders to be disallowed in government procurement up to Rs 200 crore. Second, delayed payment is a lingering issue for the sector and to get rid of it the government now announced that the Centre and Central Public Sector Enterprises will honour every MSME receivable in the next 45 days. In addition, the Finance Minister said that E-market linkage will be provided for all MSMEs as a replacement for trade fairs and exhibitions during this period. I think this economic stimulus will prove to be a game-changer for Indian businesses,” he stated.

Another startup LoveLocal (previously m.paani), a Google-Launchpad firm devoted to assist kirana shops go digital and enabling e-commerce operations for the identical has embraced the measuers by the federal government. “We are incredibly encouraged that the economic stimulus package is focused on local shops – who are responsible for 40% of employment and drive more than 90% of retail commerce. It will ensure we restart the economy from its foundation, and build an even more locally-driven shockproof system for the future,” stated Akanksha Hazari-Ericson, CEO and founder, LoveLocal.

Meghna Suryakumar, founder and CEO, Creditwatch, a credit score intelligence startup offering massive information insights to lenders and corporates, feels that the federal government’s transfer of barring world tenders from procuring up to Rs 200 crores will improve MSME registrations on e-procurement websites.

“The Government’s e-procurement sites have typically been flooded by large foreign players who bring unfair advantage in terms of pricing and size. MSMEs working as ancillary units (e.g. autos, infrastructure) lose the bidding on smaller deals. The move should improve the competitiveness of Indian MSMEs on government contracts. It should also see an increase in registration by MSMEs and Mid-Market businesses on such platforms,” she stated.

She additionally stated whereas setting threshold for eligibility for the collateral-automatic loans is useful (Rs 25 crore excellent and Rs 100 crore turnover) it’s but to be seen whether or not public sector banks will underwrite such unsecured loans at a quicker tempo on the again of those phrases.

“While a technology-driven approach may pave a way to lower recurring costs in the future, the FM’s announcements should ease the stress of a large number of promoters, partnership firms, and small private limited entities,” she stated.

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