Union Budget 2024: Boosting Growth in Key Sectors and MSMEs

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The plan of Union Budget 2024 is a strategic map to increase economic development in different parts of India. The main sectors that will be focused on are infrastructure, rural growth, real estate and manufacturing along with electric vehicles plus technology related areas such as space economy or telecom; defense sector as well as MSMEs (micro, small-medium enterprises). These industries can expect specific investment and policy assistance which will encourage an active business setting. Furthermore, the budget presents fresh motivations for enhancing the manufacturing industry and backing MSMEs by means of employment-related incentives as well as credit guarantees.

Key Sectors with Growth Potential

1. Infrastructure

Allocation of â‚¹11.1 lakh crore for infrastructure investment, including roads, highways, railways and housing projects. This is expected to help businesses such as construction and engineering companies Larsen & Toubro and GMR Infrastructure. The focus on sustainable and climate-resilient infrastructure also opens opportunities for firms in renewable energy or green construction areas.

2. Rural and Agricultural Development

The goal of the government is to boost spending in rural areas, and so there will be more money for plans related to rural life like Hindustan Unilever or TVS Motor etc. The â‚¹1.52 lakh crore given for agriculture purpose wants to encourage new advancements such as biotechnology and digital farming, which can help agri-tech startups and sustainable farming projects.

3. Real Estate and Housing Finance

The prediction states that more funds given to affordable housing and urban development could help real estate developers, like Macrotech Developers and Sunteck Realty. Financial institutions such as Aavas Financiers or Home First Finance could also benefit because of possible interest subsidy schemes linked with urban housing.

4. Manufacturing

The schemes of production-linked incentives, which are being continued and enlarged, have the goal to encourage local manufacturing and job formation. This will help companies like Dixon Technologies and Bio-con. The emphasis on capital goods and industrial parks in the National Industrial Corridor Development Programme will provide more backing for growth in manufacturing.

5. Electric Vehicles (EVs)

Budget keeps subsidies for electric vehicle usage, it is very good for companies like Tata Motors, Ola Electric, Olectra Greentech and JBM Auto. These aids are very important to help grow the EV market in India .

6. Technology and Digitalization

The focus on digitization and encouragement for new technologies like AI and digital NBFCs is likely to boost growth in the tech field. Companies involved with AI, fintech, as well as digital infrastructure will discover fresh paths for innovation and expansion.

7. Space Economy

A â‚¹1,000 crore provision for space startups hopes to greatly grow the space economy. Entities like Antrix, which is ISROâ€™s commercial part, as well as private companies such as Skyroot Aerospace who are involved in space exploration and satellite technology could see more advantages with bigger investments and backing from the government.

8. Telecom

The telecom industry, which is seeing a large sum of â‚¹1.28 lakh crore set aside for projects such as BharatNet and BSNL revival package, will experience important progress. This money ensures that telecom giants like Reliance Jio and Bharti Airtel see advancements in connectivity along with technological infrastructure improvement.

9. Defence

The amount of â‚¹6.21 lakh crore for defense sector shows the government’s focus on self-reliance in defense production and increasing exports from this area. Companies such as Bharat Dynamics and Hindustan Aeronautics Limited (HAL) are projected to gain advantages from ongoing backing.

10. Social Sector and MSMEs

The money plan puts more focus on social and welfare expenses, with higher spending for rural roads, work opportunities, and public health insurance. The tax changes and financial things aim to aid MSMEs.

New Incentives for the Manufacturing Sector

1. Production-Linked Incentive (PLI) Scheme

The budget enhances the provision for PLI scheme by 33% to â‚¹6,200 crore, backing its extension into sectors of manufacturing like electronics, pharmaceuticals, automobiles and IT hardware. It is anticipated that the scheme will broaden its scope to encompass labor-intensive areas such as textiles, leather goods including footwear and toys; these are vital for generating jobs.

2. Customs Duty Adjustments

Changes in customs duties are made to boost the growth of domestic manufacturing. Lower import duties for vital minerals such as lithium, copper and cobalt will assist in establishing domestic capabilities of processing and refining these elements which are crucial for sectors like renewable energy, defense along with electronics. The duty reduction on x-ray equipment as well as PCBA used for mobile phones and chargers backs up the local production within healthcare sector too.

3. Infrastructure Development

Significant investments in industrial infrastructure, such as industrial parks that are ready for investment and the growth of National Industrial Corridor Development Programme, are made to enhance supply chains, lessen logistics expenses and establish a favorable setting for manufacturing activities.

4. Support for MSMEs

For the MSMEs, the budget brings help in many ways. It offers employment-linked benefits and credit assurance. The Mudra loan limit has been raised to â‚¹20 lakh for giving more chances to get credit during stress times for MSMEs.

5. Export Promotion

Extra budget allocation for new PLI schemes in leather and textile sectors is predicted to boost worldwide competitiveness. Solving duty inversion for spandex yarn helps local creators and exporters in the textile industry.

6. Employment Incentives

For more jobs in manufacturing, the budget has actions related to first-time employee. This is going to lessen labor expenses and promote making of jobs.

7. Green Technology and Renewable Energy

The budget encourages the development of domestic manufacturing ecosystem for Renewable Energy through backing, grants, tax holidays and PLIs. This includes incentives in areas like green technology and alternative fuel segments.

Support for MSMEs through Employment-Linked Incentives and Credit Guarantees

Employment-Linked Incentives

1. Scheme A: Incentives for First-Time Employees

Objective: Help employers recruit candidates who may need some time to learn and become fully productive in their first job.

Benefits: The people who meet the criteria will get a wage subsidy that lasts for one month. They can receive it through Direct Benefit Transfer (DBT), split into three parts and up to â‚¹15,000. This plan is anticipated to help around 1 crore fresh workers every year.

2. Scheme B: Job Creation in Manufacturing

Objective: Encourage substantial hiring in the manufacturing sector.

Benefits: The first incentive is for employees and employers who contribute to their Employees’ Provident Fund Organization (EPFO) during the initial four years of employment. This benefit is aimed at first-time employees earning up to â‚¹1 lakh per month, with a goal of benefiting 30 lakh such workers.

Related Article on : 60 Potential Project Profiles for new MSMEs

3. Scheme C: Support to Employers

Objective: Incentivize employers to hire additional employees.

Benefits: The company will be paid back â‚¹3,000 per month for two years towards their EPFO contribution for every extra employee they hire who earns up to â‚¹1 lakh per month. This is believed to assist 50 lakh people, increasing employment levels overall.

Credit Guarantees

1. Credit Guarantee Scheme for MSMEs

Objective: Help in providing term loans for MSMEs to buy machinery and equipment, not needing collateral or third-party guarantees.

Mechanism: A self-financing guarantee fund gives guarantee cover up to â‚¹100 crore per applicant. Borrowers pay a one-time guarantee fee and an annual fee on the reducing loan balance, making it easier to get bigger loans for modernization and expansion.

2. New Credit Assessment Model

Objective: Improve credit access for MSMEs by developing in-house capabilities for evaluating creditworthiness.

Mechanism: Public Sector Banks (PSBs) make a fresh credit assessment approach supported by the digital footprints of MSMEs. This is a step forward from old methods that mainly focused on assets or turnover. The model also considers MSMEs without formal accounting systems, thus increasing financial inclusion.

3. Support During Stress Periods

Objective: Ensure continued bank credit for MSMEs during periods of financial stress.

Mechanism: A government-supported fund provides guarantees to assist MSMEs in the ‘special mention account’ (SMA) stage, allowing them to keep functioning and not turn into non-performing assets (NPAs).

Additional Measures

1. Enhanced Mudra Loans

Objective: Provide greater access to credit for micro-entrepreneurs.

Benefits: For the people who have repaid their old loans, they can now get a Mudra loan of â‚¹20 lakh instead of â‚¹10 lakh. This helps in promoting bigger micro units and small business owners at grassroots level.

2. E-Commerce Export Hubs

Objective: Enable MSMEs and traditional artisans to access international markets.

Mechanism: The setting up of e-commerce export hubs, functioning in a public-private partnership (PPP) mode, offers an easy regulatory and logistic structure for trade and export-related services. This boosts the market scope and competitiveness of MSMEs.

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Conclusion

In Union Budget 2024, there is a thorough group of incentives and support methods to help the manufacturing area and MSMEs in India. By giving more money for PLI schemes, changing customs duties, putting funds into infrastructure projects, helping MSMEs and boosting green technology the government hopes to make India a worldwide manufacturing center. When we combine these actions with employment-related incentives as well as credit guarantees, it is anticipated that they will establish an active system which deals with present job problems while also improving workforce’s possibility for being employed and providing necessary monetary assistance. At the end, these moves will push for inclusive growth and lasting progress, taking India closer to its aim of being a developed country.