Union Budget: MSMEs sniff a breather in ECLGS extension

Hyderabad: The Finance Minister also announced that the Emergency Credit Line Guarantee Scheme (ECLGS) will be extended to cover the next fiscal as well, with expanded guarantee cover of Rs 5 lakh crore. This will help the MSMEs that have been hit by the pandemic, said Mahesh Desai, Chairman of Engineering Export Promotion Council. The […]

Hyderabad: The Finance Minister also announced that the Emergency Credit Line Guarantee Scheme (ECLGS) will be extended to cover the next fiscal as well, with expanded guarantee cover of Rs 5 lakh crore. This will help the MSMEs that have been hit by the pandemic, said Mahesh Desai, Chairman of Engineering Export Promotion Council.

The scheme is aimed at helping companies tide over liquidity crunch resulting from Covid-19 curbs. Under this, banks provide additional loans to existing borrowers without asking for extra collateral. These loans are fully guaranteed by the Government against credit losses.

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Sanctions and disbursements under the facility are relatively faster since lenders have the Central Government guarantee in case of default against these loans. Hotels, restaurants, canteens, caterers, marriage halls, tour operators, as well as amusement parks and theatres can avail the facility. Accounts that are classified as non-performing assets or where overdues have crossed 60 days are not eligible.

However, there is no mention about steps in the Budget to boost the export segment. Among others, chemicals, engineering segments were looking for some support but noting has been announced to boost exports, said Desai.

Government’s decision to provide an extension under Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGMSE) till March 2023 to the MSMEs will infuse confidence among the small and medium scale industries struggling due to the pandemic, said Kapil Bardeja, CEO and Co Founder- Vehant Technologies.

Now, the defense sector will have to invest 68 per cent of its Budget procuring equipment from domestic players. The thrust on defense might indirectly benefit Telangana it has an original equipment manufacturer (OEM) ecosystem. The stress on increasing the domestic purchases might result in some orders coming to the State. There is also stress is on enhancing the research and development in the defense sector. Hyderabad is home to several R and D institutions, said Dr P Subba Rao, Chairman and MD of Ananth Technologies and CII TS convenor.