– By Sonam Motwani
As India strives to achieve a $5 trillion economy, the Micro, Small, and Medium Enterprises (MSMEs) operating in the manufacturing components sector hold immense significance.1 With their potential to contribute significantly to job creation, exports, and overall industrial growth, these businesses eagerly await the 2024 Union Budget for policy measures that can empower their journey.
The main expectations for the budget are as follows:
Enhanced Credit Availability: Access to finance remains a major hurdle for MSMEs. The sector anticipates easier access to loans, reduced interest rates, and extended repayment periods. Schemes like the Credit Guarantee Fund Scheme for MSMEs (CGTMSE) CGTMSE, Prime Minister’s Employment Generation Programme (PMEGP), Micro and Small Enterprises – Cluster Development Programme (MSE-CDP), and Raising and Accelerating MSME Performance (RAMP) can be further strengthened.
Tax Rationalisation: Reduction in Goods and Services Tax (GST) rates on raw materials and finished products, along with simplified compliance procedures, can significantly boost profitability and competitiveness. Additionally, tax breaks for research and development (R&D) and technology adoption can incentivise innovation.
Boosting Skill Development: As technology reshapes the manufacturing terrain, it becomes essential to equip the MSME workforce with cutting-edge skills. Investing in training programs is seen as vital for enhancing the overall skill set of the workforce and boosting the global competitiveness of MSMEs.
Fostering Collaboration and Innovation through Industrial Clusters: In the development of industrial clusters, a collaborative ecosystem is formed, facilitating the sharing of resources, ideas, and best practices among businesses. This not only leads to a reduction in operational costs but also cultivates innovation and synergy among MSMEs. The provision of ready-to-go workspaces, complete with essential infrastructure, plays a pivotal role in alleviating the challenges faced by startups and small businesses, allowing them to concentrate on their core operations.
Enhancing Workplace Dynamics for MSMEs: Enhancing the overall workplace environment for Micro, Small, and Medium Enterprises (MSMEs) is crucial. Initiatives aimed at pooling the purchasing power of these enterprises are expected to foster collective bargaining, leading to improved supplier agreements and increased access to cost-effective resources. This strategy not only bolsters the competitiveness of individual MSMEs but also fosters growth across the entire sector.
To incentivise exports manufactured in India: To promote Indian exports, the government needs to introduce effective policies that include tax benefits, simplified regulatory processes, and financial aid for manufacturers. These measures will enable businesses to become more competitive and improve the global demand for products manufactured in India, thereby aiding economic growth.
The Road Ahead:
The 2024 budget holds immense significance for MSMEs in the manufacturing components sector. By addressing their key concerns and implementing targeted measures, the government can empower these enterprises to become engines of economic growth, job creation, and technological advancement. As India strives to become a global manufacturing hub, supporting its MSMEs is not just an economic imperative but a strategic investment in the nation’s future.
(Sonam Motwani is the CEO & founder at Karkhana.io.)
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