Budget 2016/2017 Highlights: A wave of modern entrepreneurs
The Budget 2016/2017 makes provisions for several strategies for a New era for development and one of them is to foster a wave of modern entrepreneurs.
This strategy is about fostering a wave of modern entrepreneurs, an economy that is ripe for change and entering a new cycle requires a class of entrepreneurs that is equal to the challenge, and who can succeed in the most sophisticated of markets.
To that end, the Budget makes provision for suspending the payment of trade fees for licences of Rs 5 000 and below for a period of three years for all SMEs, except those engaged in activities such as gambling, and sales of liquor and cigarettes. This measure will benefit new businesses and some 75 000 existing businesses.
Furthermore the fiscal incentive given to SMEs has been broaden as follows:
- The 8-year tax holiday in respect of business income is being extended to new enterprises set up by individuals or co-operative societies qualifying under the scheme and registered with SMEDA;
- Existing enterprises registered with SMEDA with a turnover of less than Rs 10 million and engaged in qualifying activities under the same scheme will be given a 4-year tax holiday in respect of their business income. The tax holiday will start as from the year of assessment 2016/17.
The Budget also caters for the creation a National SME Incubator Scheme under which a matching grant of Rs 50 million will be offered with the aim of supporting and mentoring young entrepreneurs.
In order to promote modern production techniques, industrial parks will be set up as follows: a pilot Agri-Business Park will be set up at Highlands over an area of 100 acres; two new SME Industrial Parks will be constructed at Plaine Magnien and Vuillemin; and the DBM Industrial Zone at Coromandel will be converted into a modern integrated SME industrial park.
The SME Financing Scheme will be continued for another three years and extended to individual entrepreneurs as well so as to improve access to finance. The interest rate under that scheme will be brought down from 7.4 to 6 percent.
The Leasing Equipment Modernisation Scheme (LEMS) will be reintroduced to provide greater access to leasing finance and the DBM will set up a dedicated fast track desk for micro enterprises.
The NRF Equity Fund and the SME Partnership Fund will be merged into a single SME Venture Capital Fund and is being provided with Rs 150 million to bring its capital to Rs 500 million. The Government will set up a line of credit of Rs 100 million to be used towards providing factoring services to small businesses.