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.