In a significant pre-Budget development, engineering exports promotion council(EEPC) India has proposed a new tax framework for micro, small and medium enterprises(MSME) manufacturers during consultations with Finance Minister Nirmala Sitharaman.
The engineering export promotion body suggested introducing a 25 percent income tax slab for manufacturing MSMEs operating as partnerships, LLPs, or sole proprietorships, with the condition that the 10 percent tax savings be reinvested into business operations.
The proposal, presented during Sitharaman’s fourth pre-Budget consultation in New Delhi for FY 2025-26, aims to strengthen MSME liquidity and facilitate business expansion.
EEPC India emphasised that this measure would stimulate employment growth through increased business development opportunities in the MSME sector.
The export body has also requested an enhancement of the Market Access Initiative (MAI) Scheme allocation to Rs 1,200 crore.
According to EEPC India Chairman Pankaj Chadha, this increased funding would support MSMEs in accessing international trade events and establishing global business connections .
Chadha particularly emphasised the importance of dedicated funding for capacity-building initiatives targeting potential exporters in rural and interior districts.
In addressing environmental concerns, EEPC India recommended implementing a policy allowing 100 percent depreciation on solar power generation investments for MSMEs, similar to existing benefits for wind power installations.
This initiative aims to promote sustainable energy adoption while helping MSMEs reduce operational costs.
A key focus of EEPC India’s recommendations centered on steel pricing concerns, particularly in light of potential safeguard duties on steel imports.
Chadha highlighted that steel comprises 60 percent of MSME production costs, and while steel producers have committed to export parity pricing, most MSMEs source materials through intermediaries, potentially affecting their cost structure and global competitiveness .
The organisation has aligned with FIEO in advocating for an increased cap under the Interest Equalisation Scheme to Rs 10 crore, aiming to enhance financial support for MSME exporters.
These comprehensive proposals reflect the sector’s push for broader financial and operational support in the upcoming budget.
