EM­POW­ER­ING MSMEs

Auto components India - - EDITORIAL - Bhar­gav TS Ex­ec­u­tive Ed­i­tor s.bhar­[email protected]­pub­lish­ing.net

Tech­no­log­i­cal ad­vance­ments have been re­shap­ing the man­u­fac­tur­ing in­dus­try, in­clud­ing au­to­mo­tive. Ve­hi­cle fea­tures that we could only imag­ine 5 years ago are real now. Ex­per­i­ments with driver­less ve­hi­cles are pro­gress­ing. Elec­tric ve­hi­cles are fast be­com­ing main­stream, even in In­dia.

These tech­nolo­gies have cre­ated un­prece­dented op­por­tu­ni­ties to re-imag­ine the pos­si­ble. This cre­ates a case for tra­di­tional au­to­mo­tive man­u­fac­tur­ing com­pa­nies to col­lab­o­rate with tech­nol­ogy start-ups and cre­ate some­thing new for cus­tomers. It also brings in com­pe­ti­tion from new direc­tions. The chang­ing land­scape of au­to­mo­tive man­u­fac­tur­ing presents an ex­cel­lent op­por­tu­nity for them to be dif­fer­ent. In­dia has a vi­sion to be a prom­i­nent man­u­fac­tur­ing hub. The coun­try also as­pires to de­rive 25% of its GDP from man­u­fac­tur­ing ac­tiv­i­ties by 2025. The man­u­fac­tur­ing in­dus­try has to grow faster to ma­te­ri­alise this vi­sion and hit the GDP tar­get.

The mi­cro, small and medium en­ter­prises (MSMEs) need spe­cial care as they are said to be the back­bone of the in­dus­try. As a sur­prise pack­age, Prime Min­is­ter Naren­dra Modi has an­nounced a sup­port pack­age of loans of less than Rs 1 crore be­ing sanc­tioned in less than an hour. These loans can be ac­cessed through a link on the GST por­tal. Fur­ther, all GST-reg­is­tered MSMEs would get a 2% in­ter­est sub­ven­tion for fresh and in­cre­men­tal loans. And for ex­porters who re­ceive loans in the pre-ship­ment and post-ship­ment pe­riod, there would be an in­crease in in­ter­est re­bate of 5% from the ex­ist­ing 3%.

MSMEs with a turnover above Rs 500 crore would be brought on to the Trade Re­ceiv­ables e-Dis­count­ing Sys­tem (TReDS) where en­trepreneurs would be able to ac­cess credit from banks based on their up­com­ing re­ceiv­ables. While these mea­sures are specif­i­cally aimed at in­creas­ing the credit ac­cess of MSMEs, the pack­age for the sec­tor also in­clud­eds sev­eral other in­cen­tives.

With de­mon­eti­sa­tion first and then the im­ple­men­ta­tion of the goods and ser­vices tax (GST), the MSME sec­tor had been left cash-strapped. With 65 mil­lion MSMEs in the coun­try em­ploy­ing 120 mil­lion peo­ple, the sec­tor is one of the largest in terms of job cre­ation. The gov­ern­ment’s re­cent an­nounce­ment and mea­sures help boost the growth of MSMEs, which will in turn help the over­all in­dus­try sec­tor.

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