ECLGS Scheme Extended till March 2023 for MSMEs: Nirmala Sitharaman

The Emergency Credit Line Guarantee Scheme (ECLGS) for MSMEs has been extended till March 2023 along with an enhanced guarantee cover by Rs 50,000 crore to take the total limit of the scheme to Rs 5 lakh crore from Rs 4.5 lakh earlier, Finance Minister Nirmala Sitharaman announced in the budget 2022 speech on Tuesday. 

“ECLGS has provided the much-needed additional credit to more than 130 lakh MSMEs. This has helped them mitigate the worst impact of the pandemic. The hospitality and related services especially those by micro and small enterprises are yet to regain their pre-pandemic level of business. Considering these aspects, ECLGS will be extended up to March 2023 and its guarantee cover will be expanded by Rs 50,000 crore to the total cover of Rs 5 lakh crore,” Sitharaman said.

Along with this, Sitharaman in her budget speech said that the Rs 6,000 crore Raising and Accelerating MSME Performance (RAMP) program for MSMEs will be rolled out in the coming five years. The minister said the program would improve the competitiveness and productivity of MSMEs. 

“CGTMSE scheme will be revamped with the required infusion of funds. This will facilitate additional credit of Rs 2 lakh crore for micro and small enterprises and expand employment opportunities,” Sitharaman said. 

"The Budget is focused on growth, considering the two previous tough years. The Finance Minister has added massive opportunity to introduce measures that augment and boost the growth of the MSME sector that has been facing the brunt of reduced business sentiment, with COVID only exacerbating this. Liquidity stress in the system has stagnated growth. The forgotten middle, the MSME sector has received much-needed relief with emergency credit line schemes to 5 lakh crore, a revamped CGTMC with a direct infusion of funds. Turning to digitization will lead to a direct line increase of subsidies that in turn will help revive demand increase liquidity for MSMEs and add much-needed succor and accessibility," says Seema Prem, Co-founder & CEO, FIA Global.

"We are grateful to the honorable Finance Minister for extending the ECLG scheme to the MSME sector. This will help us access the capital needed for growth and deploy efficiently," adds Vimal Sharma, Founder-Director and CEO, SMOOR.

"We have an optimistic outlook towards the growth of the retail industry which has truly become omnichannel in today's world. The Union Budget 2022 seems very balanced and forward-looking for the retail sector. A special mention of the extension of the MSME scheme will be beneficial for the inclusive growth of the industry. The Emergency Credit Guarantee Scheme that is extended to March 2023 will provide a stimulus for the growth of the economy. With an overall objective of Make In India, in order to double farmers' income, food processing needs to play a major role and the government needs to give manufacturers a level playing field. Taking this into consideration, the budget 2022 has laid emphasis on crucial aspects like food processing, Agri start-ups, and Agriculture University which on implementation will help trigger advancement for the sector," states Aditya Bagri, Director at Bagrry's Group.

Industry Reactions

Mangesh Panditrao, CEO & Co-Founder, Shoptimize says, "The Union Budget announced by the Honorable Finance Minister today supports the recent growth momentum India is witnessing. We thank the Govt. for extending the tax incentive for startups and announcing a new Rs. 6000 cr fund to boost MSMEs and startups across India. This will open a new door of opportunities for startups & MSME's in upscaling their businesses. We are also happy to note that the capital gains exemption for investments in startups has been extended, which will enable more investments in this sector, and encourage more venture capitalists to expand their portfolios."

Dilli Babu Nandarapu,Founder & CEO, ShopConnect says, “The Union Budget 2022 saw the MSME sector getting a much needed booster dose with a series of initiatives that will accelerate economic growth. The extension of Emergency Credit Line Guarantee Scheme (ECLGS) and the interlinking of Udyam, e-Shram, National Career Service(NCS), and Aatamanirbhar Skilled Employee Employer Mapping (ASEEM) portals is a positive move as it will enable ease of doing business in India which in turn will encourage entrepreneurship.  Moreover, Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE) scheme and RAMP programme  will also support their revival and growth. ”

Sandip Chhettri, CEO, Tradeindia says, "As expected, it is encouraging that Budget 2022 has come with a number of MSME-friendly measures. It was announced that a Rs 6,000- crore Raising and Accelerating MSME Performance (RAMP) program will be rolled out in the coming five years. This is a big relief for the Covid-hit sector. Similarly, the decision to interlink Udyam, e-shram, NCS & Aseem portals and to widen the scope of these portals is a welcome one. It will help provide better opportunities to the sector in terms of credit facilitation and other key services. We also welcome the announcement to raise a fund with blended capital under the co-investment model facilitated through NABARD. This fund is aimed at pushing startups in agriculture & rural enterprises, which is very important in this difficult time”

Porus Doctor, Partner and Consumer Industry Leader, Deloitte India states, "India's economic growth in the current year is estimated at 9.2 percent, the highest among all major economies. The Government has announced an Rs. 6,000 crore program to support MSMEs over the next five years. The increased focus on employability and e-skilling will go a long way to support the MSME sector and revive industrial activity. Production Linked Incentive (PLI) Scheme for achieving Aatmanirbhar Bharat has been extended to 14 sectors with a potential to create 60 lakh new jobs."

Akanksha Hazari, CEO and Co-founder, LoveLocal states, “We at LoveLocal believe that MSMEs are core to our economy. They are one of the biggest job creators in our country are critical to India’s long term economic success. We support all governments initiative towards an Atmanirbhar Bharat and hope for more in the future.”