The Union Budget 2013-14 embodies strong features of promoting investment and putting the economy on the high growth path leading to inclusive and sustainable development. With a view to giving boost to small and medium enterprises, some of the benefits extended through the sector include:

Enhancing the refinancing capability of SIDBI from the current level of `5,000 crore to ` 10,000 crore per year. This is helpful in providing credit facilities at affordable rate by SIDBI to micro, and small enterprises through banks and SFCs. This will benefit over 3.5 lakh MSEs. The Budget is quite progressive for the growth of MSME sector.

SIDBI set up the India Microfinance Equity Fund in 2011-12 with budgetary support of `100 crore to provide equity and quasi-equity to Micro Finance Institutions. An amount of `104 crore has already been committed to 37 MFIs. Keeping in view the unmet demand and need for improving capital base of the smaller & medium sized MFIs to enable them to raise additional funding, Hon’ble Finance Minister has provided an amount of `100 crore in the Union Budget to the IME Fund. This is expected to expand reach of 60-70 additional MFIs, benefiting more than 12 lakh additional clients, mostly women.

Last year, Factoring Regulation Act was enacted to pave the way for orderly growth of factoring services in the country. However, the volumes and coverage of factoring are yet to witness any perceptible growth. In order to promote the tool of financing for the benefit of small suppliers, the Budget has proposed a corpus of `500 crore to SIDBI to set up a Credit Guarantee Fund to extend guarantee cover for facilitating factoring transactions in respect of SMEs. The corpus shall help in leveraging the volume of factored debts at a much higher scale (upto `10,000 crore pa).

Micro, small and medium enterprises have a large share of jobs, production and exports. Many of the SMEs do not graduate the higher category for the fear of losing the benefits associated with staying small /medium. To encourage them to grow, the Budget has proposed the continuum of benefits enjoyed by them for upto three years after they grow out of the category in they obtained the benefit. A beginning in this direction is proposed to be made by extending the non-tax benefits to the eligible units for three years after they graduate to a higher category.

Other measures announced in the budget for MSME sector include: assistance of ` 2,200 crore during 12th Plan period for setting up 15 Tool Rooms and Technology Development Centres by the Ministry of Micro, Small and Medium Enterprises ` 2400 crore under Technology Upgradation Fund Scheme for the textile sector, setting up of Apparel Parks under the Scheme for Integrated Textile Parks, implementation of a new scheme called the Integrated Processing Development Scheme with an outlay of ` 500 crore to address the environmental concerns of the textile industry, and availability of working capital and term loans at a concessional interest to handloom weavers.