Ankit Jain & Sumit Bhatia
As the Union Budget approaches, Small and Medium Enterprises (SMEs) across India are anticipating policy measures that can help address some of their most pressing challenges and foster long-term growth. SMEs, which play a vital role in India’s economic framework, are not only key drivers of employment but also crucial contributors to innovation and the manufacturing sector. However, despite their importance, they often face significant barriers that hinder their potential to thrive.
A key concern for SMEs is the delayed payments from corporates, despite the government mandating payments within 45 days. This policy was introduced to improve cash flows and liquidity, but it is not always followed in practice. Reports suggest that many corporates continue to delay payments, leaving MSMEs struggling to maintain their operations. The rumored withdrawal of this policy would be a regressive step, as it would deprive SMEs of a lifeline that is critical to their survival. To address this, the government must focus on strengthening enforcement mechanisms, ensuring that corporates are held accountable for any delays in payments. This would provide SMEs with the financial stability they need to reinvest and grow.
Another critical area that requires attention is the issue of cheque bouncing. Section 138 of the Negotiable Instruments Act, which deals with the penalties for dishonored cheques, needs to be made more robust. This provision is often seen as ineffective due to lenient enforcement, allowing defaulters to evade consequences. For SMEs, delayed or bounced payments can severely disrupt cash flows, hindering their ability to pay employees, procure materials, or service debts. By introducing stricter penalties and improving enforcement of Section 138, the government can incentivize timely payments and protect the financial health of SMEs.
Furthermore, as the global economy becomes increasingly digital, SMEs must embrace technological advancements to remain competitive. However, the costs of adopting such technologies are often prohibitively high for small businesses. The government can play a crucial role by offering dedicated incentives, subsidies, and grants to help SMEs adopt new technologies, ranging from digital marketing tools to automated inventory management systems. Such measures would enable SMEs to stay relevant and efficient in a digital-first world, enhancing their competitiveness and contributing to the broader goal of a self-reliant economy.
The Union Budget presents an opportunity to address the challenges faced by SMEs, which are crucial to India’s growth story. By strengthening enforcement of payment timelines, making penalties for cheque bouncing more stringent, and offering incentives for technology adoption, the government can provide much-needed relief to SMEs, ensuring their resilience and continued contribution to the economy.
The writers are founders, Aksum Trademart, a supply chain solutions company.
