Budget 2021 for MSMEs

Preeti Kaushik
2 min readFeb 1, 2021


As soon as the budget is announced by respected Mrs Nirmala Sitharaman the sensex went up. This budget has a lot in it’s pockets for startups, MSMEs as being speculated by experts earlier.

Budget 2021 is the most expected of any of the previous budgets due to the context behind it — Covid-19, GDP contraction, dislocation of supply chains, a bouncy stock market and other such factors. The respected Finance Minister also said that the budget will be a memorable one — “Budget as before”. A few days before the market budget, there was a wave of changes in capital gains tax for the market listed as rumours, several blogs and articles were also written and uncertain to pursue the reforms and large-scale reforms of the respected Finance Minister. The country was at the same peak after the announcement of the first summit.

Entrepreneurs were also eagerly awaiting the budget, hoping that they would request a myriad of changes. But since the 2016 budget, budgets and budgets have not been much distributed for Indian startups in 2021, unfortunately, the trend continued. The industry asked the same for the last five years which was carried forward this year, with entrepreneurs expecting very few items to be addressed.

The ESOP changes announced in Budget 2020 were ringed only for IMB registered startups, with just under 400 in a country claiming more than 50,000 startups. Rationalisation of the IMB (Inter-Ministerial Board) framework — where a group of bureaucrats have to decide whether a startup is “innovative”, failing the Indian startup ecosystem by postponing all startups as innovative by less than 1% Has been done, is still awaited. It should be noted that all tax incentives for startups apply only to IMB registered startups, thus 99% of these multi-tax-exempt tax incentives and breaks are deprived of the Indian startup ecosystem.

Startups received only 2 incentives in this 2021 budget which were mere extensions of existing schemes.