Budget 2024: Key Opinions on ESDM Sector and MSME Support

Opinions on ESDM Sector and Enhanced MSME Support Initiatives

By Jairaj Srinivas
Director General-CIMEI
Confederation of Indian
MSME, ESDM & IT

New and additional employment incentives across manufacturing and other sectors will encourage workforce growth and bolster the Make in India initiative. These incentives complement existing PLI schemes and provide additional income tax benefits for hiring more employees.

The proposal to reimburse employers up to Rs 3000 per month for 2 years for employee provident fund contributions is an interesting change, with the government lending a hand and nudging employers towards new employment generation.

Additionally, the new scheme will provide a month’s wage and contribute to provident fund, applicable to new workforce in formal sectors, thereby encouraging new hires.

Other applicable conditions for the benefits remain to be seen, but definitely a step in the right direction to address a key issue of employment.

These initiatives address the major issue for MSMEs today, which is access to credit, by increasing the reach and reducing thresholds. Access to finance is a critical barrier for many MSMEs looking to scale their operations and modernize their production processes.

This initiative not only alleviates financial constraints but also encourages technological advancements and productivity improvements within the sector. We advise MSMEs to leverage this opportunity to invest in state-of-the-art machinery and equipment, which can lead to enhanced operational efficiency and better market positioning.

The focus on providing funding through banks to MSMEs is a great initiative.

• Providing collateral-free loans using credit guarantee schemes.
• Alternate methods to evaluate the eligibility of MSMEs for loans.
• Increasing the Mudra threshold to Rs 20 lakh for MSMEs that have successfully repaid previous loans.
• Increasing the reach of institutions through SIDBI, etc.
• This combination of measures is likely to have a significant positive impact on the MSME sector, promoting growth,
• innovation, and employment across the industry.