Budget 2024 includes a Rs 100 crore no-collateral credit guarantee, an increase in Mudra loans from Rs 10 lakh to Rs 20 lakh, and the development of ” plug-and-play” industrial parks near 100 cities.
The 2024 Union Budget has been well received by industry leaders for its focus on supporting India’s small and medium enterprises (SMEs), a crucial sector for employment that has struggled in recent years. Previously, the government faced criticism for prioritizing large corporations over SMEs. However, the latest budget, following the BJP’s modest performance in the national elections, introduces significant measures to rejuvenate this sector.
Key initiatives include a Rs 100 crore collateral-free credit guarantee scheme, an increase in Mudra loan limits from Rs 10 lakh to Rs 20 lakh, and the development of “plug and”play” industrial parks near 100 cities.
Credit Guarantee Scheme:
This scheme operates as a self-financing mechanism, allowing an MSME to secure a term loan without collateral or third-party guarantees. Dr Anchal Jain, CEO of PMI Electro Mobility Solutions, praised the government’s emphasis on easy access to term loans for MSMEs, which could benefit India’s 63 million MSMEs across various sectors, including EV manufacturing and auto components.
Mudra Loans & Industrial Parks:
The enhancement of Mudra loans is expected to bolster startups, particularly in the EV sector, according to Harshwardhan Sharma of the Nomura Research Institute. He also highlighted the benefits of reduced customs duties on certain electronic components and the establishment of industrial parks, which will support automotive manufacturing.
Industry leaders, including those from Bharat Forge and SKF India, have endorsed the government’s efforts to strengthen MSMEs, promote urban modernization, and support the transition to sustainable energy. The initiatives are anticipated to generate significant employment opportunities, particularly for the youth, and spur demand in the EV sector, particularly for electric three-wheelers used in cargo applications.
