After the announcement by Prime Minister Narendra Modi about providing Rs 20 lakh crore as a stimulus package to the nation, the Finance Minister today elaborated on the plans. Nirmala Sitharaman told that micro, small and medium enterprises, collectively called as MSMEs, will get collateral-free loans. A total of Rs 3 lakh crore will be given to the MSMEs. This in turn will, the FM said, benefit more than 2 lakh small industries. She also changed the definition of MSMEs, thereby allowing them to get this benefit even with a higher investment in place. Express Drives spoke with a few component makers as well as auto manufacturers on what they thought about this COVID-19 relief package. Here are the responses.
Sunjay Kapur, the chairman of Sona Comstar said [auto_blockquote title=”It’s a good first step to address the issue of survival as a large number of small businesses which is the back bone of our country and measures taken to help them in way of collateral free loans and the fund of funds. Great step in government tenders up to 200 cr limited to Indian MSMEs.” “Discoms getting 90,000 cr is also a positive. As is the 70,000 cr support to NBFCs. Good steps to start with.”][/auto_blockquote]
President of ACMA, Deepak Jain, said, [auto_blockquote title=”The announcement made by Hon’ble Finance Minister in context of ‘Atmanirbhar Bharat’ as envisioned by our Hon’ble Prime Minister, is indeed heartening and reassuring. Change in definition of MSMEs has been a long-standing recommendation of ACMA. With this new classification, a significant number of ACMA members stand to benefit as the sector is dominated by smaller enterprises. That apart, infusion of liquidity through the Collateral Free Automatic loans and the Subordinate debt scheme, will ease the severe challenge of Working Capital being faced by the sector.” “We are also hopeful that the Government will soon announce a package for demand generation for the automotive sector. A uniform GST rate of 18% on all vehicles and auto components, backed by an incentive-based scrappage policy would bring the automotive industry back on track. That apart, we look forward to support from the government for payment of salaries of workmen and contractual labour during the lockdown period.”][/auto_blockquote]
Anil Kumar, president and managing director, SEG Automotive India said [auto_blockquote title=”The new definition of MSMEs, provides more clarity and room for portfolio upgrades. The credit line facility will financially support the MSMEs in restarting and ramping up the operations. Overall, the liquidity measures for the MSMEs and NBFCs will encourage new investments, promoting growth across the supply chain and safeguarding employment.”][/auto_blockquote]
[auto_blockquote title=”In the current difficult times, strengthening the economy is one of the major challenges. Also, as we move forward and re-open business activities, we need strong support to recover the industries and any losses borne due to the pandemic. Providing capital support to MSMEs is definitely in line with this requirement and will help accelerate the growth. We welcome government’s efforts in infusing capital at the bottom of the pyramid, which will eventually allow all the sectors to grow in a holistic manner. Also, we see that a lot of import was hampered due to COVID 19 spread. This affected industries all across, including automobile. With government’s support we can expect an increase in localisation which will strengthen our economy even more. MSME is backbone for any industry and if governmentt is supporting them, then we are sure that we will achieve our goal to make our country SELF RELIANT sooner than expected.”][/auto_blockquote] said Jeetender Sharma- MD, Okinawa.
Maxson Lewis, managing director, Magenta Power commented, [auto_blockquote title=”The Finance Minister’s announcement focussed towards MSME is the right approach. Making capital available to the MSME sector which is the biggest employer is welcome. The EPF contribution will make sure money will go to people who are working for it. Cash infusion is required at the bottom of the pyramid.”][/auto_blockquote]
Naveen Soni, senior VP, sales and service, Toyota Kirloskar Motor shared, [auto_blockquote title=”We appreciate the Government’s efforts to elevate the economy during these difficult times. Now, with the focus shifting towards reopening and strengthening the economy in order to maintain business continuity and sustain jobs, the announcement of the economic package by the honourable Prime Minister comes as a welcome relief. We welcome the message for India to be self-reliant and the need to introduce strong reforms, which will further strengthen the Indian auto industry which is one of the key pillars of economic growth and has the distinction of having a globally competitive and very well developed supply chain with high level of localization. The stimulus package of INR 20 trillion is comparable with the measures taken globally and will definitely boost morale of the stressed sectors and industries, especially the MSMEs. Furthermore, the reclassification of the MSME sector, based on investment and turn over will open up various enterprises to remain as MSMEs, aiding cash flow with collateral free loans. The Government is taking measures to boost the supply side of the economy and we now await their support to boost the demand side where govt spending can boost a faster revival of the economy. We at Toyota have been strongly supporting the Government’s ‘Make in India’ initiative and have introduced various initiatives over the years through localization of parts and components, empowering local suppliers and promising quality at par with the global standards. We hope, through this new stimulus and the likely reforms, the industry will be able to iron out bottlenecks pertaining to liquidity, supply chain, demand, labour related issues and restore the economy in an effective manner. Given the current situation, we understand that we will have to operate alongside COVID-19 for a prolonged period. However, through this initiative, the Government has inspired us to strengthen our preparedness and confidence to resume business operations while safeguarding the health and safety of all stakeholders. The relief package announced by the Honourable Finance Ministry today will certainly support in helping the MSME sector, NBFCs and also help in building demand in the lockdown 4.0 phase. We look forward to cater to our valued customers during this time of distress and will continue to support the Government in this fight against the COVID-19 epidemic.”][/auto_blockquote]
Venu Srinivasan, chairman of TVS Motor Company said, [auto_blockquote title=”The hon’ble Prime Minister has showcased outstanding leadership in battling the COVID-19 crisis. We appreciate the Government’s initiative to roll out a visionary economic stimulus package of INR 20 Lakh Crore. This will bring much needed relief to several stressed sectors and industries. First, the Government must prioritise helping the small, medium and micro industry employees and facilitate a direct benefit transfer to employees in unorganised and small scale sectors. Second, they must ensure credit backstop for micro, medium and small industries so that they do not go into cash crunch and finally, I am hopeful that there is a stimulus created to propel demand. Demand is key to drive the market and it is essential to inject confidence in the economy for people to come out and buy. The Indian Auto industry is a strong pillar of the Indian economy with huge contributions to GDP and employment. We are confident that this focused package will infuse positive sentiment in the industry in the long-run.”][/auto_blockquote]
Express Drives feels that overall this announcement by the FM has infused a fresh lease of life amid the gloom. Most of the component manufacturers employ daily wage workers and these companies and employees will be finding it hard to stay afloat. The announcement comes as a raindrop on parched land right now. As is evident from the auto MSMEs as well as biggies, the approach seems to be right and will benefit the country’s largest contributing economy stay afloat.
