Growth Enabler in Manufacturing and MSME in India
After a very long time, the country witnessed the last Union Budget for 2024-25, the ultimate one in the series presented by Finance Minister Nirmala Sitharaman, which puts India on the right economic path. Filled with ensuring growth, innovation, and sustainability, this budget has made several starts that are sure to revolutionize the manufacturing sector and give a much-needed push to micro, small, and medium enterprises. Through this clear and detailed market research analysis, an attempt is made to spell out the potential impact of these budgetary allocations on the future of Indian industry.
As we probe with the key highlights of the budget, we will get deeper into how these are situated toward solving these key manufacturer- and MSME-related issues and, at the same time, opening up opportunities for growth and expansion. Right from increasing capital expenditure to making targeted incentives available, the Union Budget 2024-25 paves the way for a whole new era in the industrial landscape of India.
Boosting Manufacturing through an Increase in Capital Expenditure
1. Record Capital Expenditure of
- Capital expenditure of ₹11.11 lakh crore has been provided in budget estimates for 2024-25
- It represents an increase of 11.1% over the budget conducted last year
- These will help in generating productive resources that will help stimulate economic growth and reduce unemployment
2. Infrastructure development:
- Increased investment in high roads, railways, and ports
- Enhancing better connectivity that reduces the higher cost of Logistics for manufacturers
- Improved supply chain efficiency and market access
3. Effect on manufacturing
- Expected to be a spur to private investment in manufacturing
- May be an instrument to create new manufacturing clusters around the country
- Eventually resulting in higher competitiveness in international markets
Market Research Analysis shows that this will hopefully create a multiplier effect down the line to the production sector, which will have increased output and the potential for exports.
Empowering MSMEs through Targeted Incentives and Support
1. The scope of extension of tax benefits for startups and MSMEs
To this effect, income tax benefits have been extended to eligible startups incorporated until March 31, 2025.
- Carry forward of losses allowed for ten years from incorporation
2. Credit guarantee of MSME
- ₹10,000 crore to be provided for the credit sanctions
- It is expected to enable an increase of around ₹2 lakh crore worth of collateral-free credit to be made available for the MSME
3. Technology upgradation and skill development programmes
- The budget will have components to adopt technology and enhance people's skills
- Focus on digital transformation with readiness for Industry 4.0
4. Reforms for Ease of Doing Business
- Simplification in procedures of compliance
- Single-window system of clearance for registrations of MSME
The Recent Market Research Analysis means that these specific measures, if taken by the government, will ensure increased productivity of the MSME to the tune of 15-20% over the next two years, thereby adding substantially to the economic growth of India.
Innovation and Research and Development in Manufacturing
1. Setting up National Centers of Excellence in Advertising with AI.
- Budget Provision in building National CoEs - AI Specific
- Industry, Academia and Govt Collaboration
- Develop AI driven state-of-the-art solutions in the manufacturing process
2. Tax Incentive for R&D Expenditure
- 150% weighted deduction on R&D expenses for manufacturing companies
- Promotion of indigenous technology development
3. Patent box regime
- 10% concessional tax rate on any income derived from patents developed and registered in India
- Objective of encouraging innovation and creation of intellectual property
4. National Research Foundation
- Enhanced fund requirements for National Research Foundation
- Support for industry-academia partnerships in manufacturing research
Market Research Analysis estimates that these programs will result in a 25% increase of patents from the manufacturing sector in the coming next five years, and will help India place as one of the manufacturing innovation hubs in the world.
Sustainable Manufacturing and Green Technology Adoption
1. PLI for Green Technologies:
- PLI launched for manufacturing green energy equipment
- The scheme will primarily focus on solar panels, wind turbines, and equipment for storing energy
- This is estimated to lead to the creation of 500,000 jobs in green manufacturing
2. Carbon credit trading
- Introduce the necessary regulatory framework for carbon credit trading
- Promote the manufacturing industry to adopt low carbon technologies
3. EV Manufacturing Push
- Concessional of Customs Duty on Lithium-Ion Cells for EV Batteries is continued.
- Supporting Manufacturing of EV charging infrastructure
4. Circular Economy initiatives
With the above initiatives taken, here, the budget has identified a large fund to impart the principles of the circular economy through manufacturing namely, reducing wastage and recycling with high efficiency of resources.
According to recent Market Research Analysis, Green Manufacturing in India is poised to grow at a CAGR of 15% for the next ten years with all these Budgetary Initiatives, along with the Current Global Sustainability Trends.
Conclusion:
The Union Budget 2024-25 lays down a comprehensive and detailed roadmap to grow and develop manufacturing and MSMEs towards addressing major challenges. Of course, with respect to answering that, it lays out the challenges of the major enabling innovation and sustainability ecosystem pieces.
To get deeper insights into the impact of the Union Budget 2024-25 on your business and explore the most effective growth strategies in your specific industry, talk to Kaizen Market Research and Consultancy. Get in touch with our team of professionals, analysts, and industry experts for hands-on insights and strategic recommendations to further help your business stand up and thrive in this dynamic atmosphere.
But do not lose out on the opportunities that this budget creates. Call Kaizen Market Research and Consultancy today, to harness the full potential in the light of these new policy initiatives, for your manufacturing or MSME venture.