Corporate File

Ease capital access for MSMEs

Ambareesh Murty | Updated on: Jan 30, 2022
Ambareesh Murty, Co-Founder and CEO, Pepperfry

Ambareesh Murty, Co-Founder and CEO, Pepperfry

Ambareesh Murty on his wishlist for the Union Budget

· Over the last 18 months, the MSME sector went through lots of ups and downs that resulted in massive cash flow issues. Even the start-up ecosystem got impacted by the overall Covid-induced economic slowdown. Therefore, the budget should take steps towards making funds easier for MSMEs to come by. Lending to the MSME sector should be made simpler, and the cost of capital should come down.

· Second, give an overall impetus to spending, so that discretionary purchases go up. By FY26, the furniture and furnishings market in India is estimated to be around $40 bn, and 70 per cent of this will be fuelled by the unorganised sector. A couple of years ago, the government had identified furniture as a key area of employment generation. There has to be an impetus to domestic manufacturing to make this happen. Reduction in GST on locally manufactured goods (from 18 per cent levels to 12 per cent) will drive demand and ramp up domestic manufacturing

· MSMEs and small businesses contribute nearly 30 per cent to India’s GDP. If we do stuff to help them grow, we have a shot at achieving a five trillion-dollar economy. Ensuring access to cheaper capital in an easy manner and putting in place mechanisms to simplify expansion of businesses is important. Compliance requirements in one state should be similar to other states. The Centre could provide policy guidance on this

· A comprehensive and sustainable timber policy would help farmers and manufacturers.

Forecast

· In the last couple of years, a lot of investments across India were government led — roads, railways, infrastructure. I think there could be something that incentivises private capital expenditure, which has remained sluggish. If there is a way of further incentivising investments into say furniture hubs, such as the one coming up in Thoothukudi , it would lead to more employment

· There could be continued initiatives for housing for all

· I don’t think income tax slabs/ rates will change, though there is a case for putting more disposable income into the hands of people to aid spending

Flashback

It’s not directly budget linked, but there was a detrimental impact to our business when the GST regime was initially rolled out in 2016-17 and furniture was placed in the luxury bracket at 28 per cent. It took about six months for it to be rolled down to 18 per cent.

Ambareesh Murty is Co-Founder and CEO of online furniture marketplace Pepperfry; 60-65 per cent of Pepperfry’s business is driven by MSMEs

Published on January 30, 2022
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