Union Budget Incentivizes Manufacturing Sector

Finance Minister Nirmala Sitharaman announced the Union Budget 2024 on July 23, 2024, putting a strong emphasis on employment, upskilling, and industry, in addition to focusing on roads, railways, ports, and urban development to further employment and overall productivity. This is a clear indication and a step towards India’s Vision of ‘Viksit Bharat@2047’, which envisions the country as a superpower. Hyderabad International Machine Tool & Engineering Expo (HIMTEX) comes at an opportune time, capitalizing on the positive momentum and providing an apt platform for industry stakeholders, bolstering manufacturing and its allied industries.

The announced Budget with a new tax regime, includes key reforms and spans nine key priorities, impacting various sectors. The allocation of INR 11.11 lakh crore is set to enhance national infrastructure, increase funding for R&D, and extend support to startups and MSMEs, which will not only foster innovation, but is also aimed at creating millions of jobs that directly benefit the manufacturing and related industry. With glimmers of hope beginning to shine through for the manufacturing and machine tool industry, the Union Budget 2024 has been praised for its forward-looking and comprehensive approach towards fostering sustainable and inclusive economic growth.

A Budget Focused on ‘Viksit Bharat’

In the Union Budget 2024 presented by the Government, industry leaders have noted several direct and indirect growth plans for creating the growth map of ‘Viksit Bharat’ or a developed India with a focus on assertive sectors like agriculture, manufacturing, energy, and employment.

In this regard, Shradha Suri Marwah, President, Automotive Component Manufacturers Association of India (ACMA)—the apex body representing India’s auto component sector—and CMD, Subros, shared, “The budget, a blueprint for Viksit Bharat, will drive sustainable yet inclusive growth, especially in the manufacturing industry, at a rapid pace.

Reiterating similar sentiment, Jaikaran Chandock, Director, Balu Forge Industries Ltd, stressed, “The Budget has laid the foundation for achieving the goal of ‘Viksit Bharat’ and a roadmap for sustainable and inclusive economic growth. Through renewable energy transition, strengthening energy mix with nuclear energy, capex push in infrastructure development, and focus on education, employment, and skills, the budget builds the pathway for transformation-led growth for the economy.”

Mukund Vasudevan, Managing Director, SKF India and President, SKF ISEA Region, also opined, “The Budget’s focus on skilling and employment is particularly noteworthy, with an impressive INR 2 lakh crore dedicated to youth and skill development over the next five years. This initiative promises to create a skilled workforce that will not only enhance productivity, but also contribute to a ‘Viksit Bharat’.”

Manufacturing & Renewable Energy: Twin Pillars of Growth

The Budget’s strong emphasis on renewable energy, including solar, thermal, and nuclear power, sets the stage for HIMTEX to showcase innovations and collaborations that align with these goals. “The PM Surya Ghar Muft Bijli Yojana, is a step in the right direction and will promote a more sustainable future,” says Amit Jain, Global Chief Executive Officer, Sterling and Wilson Renewable Energy Group, evaluating the budget announcement as an acknowledgement of the industry’s huge potential in terms of meeting India’s global sustainability commitments. “The announcement to fully exempt 25 critical minerals and reduce BCD on two of them will assist the renewable energy sector, since it shall provide a major fillip to the processing and refining of such minerals and help secure their availability. The proposed policy to promote pumped storage projects for electricity storage will help facilitate smooth integration of growing renewable energy share, thereby reducing challenges posed by its variable and intermittent nature.”

On the exemption of customs duty on critical minerals, Gaurav Dolwani, Founder & CEO, LICO Materials, said, “It’s a big step towards achieving sustainability. As a recycling company, we welcome the proposal. The price benefit will be passed onto the end user, fueling the Government’s electrification vision for 2030 and net zero vision for 2070.”

Infrastructure & Employment: Catalysts for Economic Transformation

Sunil Mathur, Managing Director and Chief Executive Officer, Siemens Ltd, welcomed the Government’s consistent approach towards fiscal consolidation and supporting Capex in infrastructure by reconfirming the allocation of INR 11.11 lakh crore in the Budget as well as additional allocations towards improving urban and rural infrastructure. He also stated, “We also welcome the Government’s focus on employment generation, skilling, women empowerment, MSMEs, and climate change mitigation, as well as their encouragement to the states to carry out land and labor reforms and improve the ease of doing business further.”

In the same context, S Sunil Kumar, Country President, Henkel India, commented, “Over the next five years, the focus on large-scale projects has the potential to transform the economic landscape, reduce logistical costs, and improve the efficiency of transportation networks. It is also promising to see the Government taking measures to boost job creation in the manufacturing sector, a key contributor to the country’s GDP.”

The development of ‘plug and play’ industrial parks in nearly 100 cities with complete infrastructure—as per Amrit Acharya, Co-founder & CEO, Zetwerk—is a positive step towards creating a more manufacturing-friendly environment. “Measures like reduced customs duty on mobile phones and components, the abolishment of angel tax for startups, and the expansion of exemptions for solar cell and panel manufacturing will all contribute to propelling domestic manufacturing and innovation,” he added.

MSMEs & Innovation: Key Drivers of Economic Resilience

Acharya further asserted, “The Government’s dedication to empowering MSMEs through various initiatives deserves praise. These initiatives, like the Credit Guarantee Scheme, will grease the wheels of manufacturing by simplifying access to loans for critical machinery and equipment purchases. Additionally, Digital Footprints for Credit Assessment will open financing doors for MSMEs without formal accounting systems. The MUDRA scheme’s increased loan limit empowers successful entrepreneurs to scale their businesses, while expanding the TReDS platform improves MSME working capital by facilitating easier conversion of receivables into cash.”

The Government’s intention to partner with the private sector to develop small modular reactors—according to Anil G Verma, Executive Director & CEO, Godrej & Boyce—is a good step emphasizing the importance of nuclear energy in India’s energy mix. “Moreover, the INR 1,000 crore venture capital fund to promote space technology is a welcome step in encouraging greater participation of the private sector in India’s burgeoning space sector, where we have the potential of being the global leader for satellite launches,” he elaborated. “The Budget has managed to pave the way towards an inclusive economic growth, through measures that will encourage greater private sector participation while maintaining the fiscal glide path to a 4.5 percent fiscal deficit in FY26. A slew of measures aimed at MSMEs is likely to ease the pressure on this crucial sector of the economy, which contributes 30 percent to India’s GDP.”

The emphasis on employment-linked incentives for the creation of jobs and credit guarantee schemes for MSMEs in manufacturing—as per A Kulandai Vadivelu, Chief Financial Officer, TVS Electronics (TVS-E)—will help propel the sector’s growth trajectory.

Women Empowerment & Inclusive Growth

Maintaining the momentum, Vadivelu said, “There was a growing need for a skilled workforce to address the demands of Industry 4.0, and the Government’s focus on employment and skilling programs will help ensure sustainable growth and maintain a competitive edge. Ongoing support through financial incentives and infrastructure development will play a key role.”

“The Government—said Hitesh Garg, VP, and India Managing Director, NXP Semiconductors—has also allocated over INR 3 lakh crore for schemes benefiting women, including the establishment of women-specific skilling programs to enhance their participation in the workforce.” The measures to facilitate higher participation of women in the workforce are also welcome by ACMA, for fostering inclusive growth and encouraging gender diversity in the automotive value chain.

Summing it up with Henkel India’s Country President’s takeaway: “It is a welcome development that will unlock productivity, promote social equity, and enhance India Inc’s journey towards a more diverse and inclusive workplace. By leveraging the full potential of all talent, including women, industries can build a more robust and capable workforce.”

Telangana Budget—Hyderabad in Focus

Deputy Chief Minister and Finance Minister Mallu Bhatti Vikramarka also presented the 2024-25 Telangana Budget on July 25, 2024. The State Government has allotted INR 2.91 lakh crore for FY 2024-25, with INR 10,000 crore allocated for Hyderabad’s Capital development. The Government has a higher allocation of INR 2,762 crore for Industries, INR 774 crore IT Depts and Finance which reaffirms its commitment of making Hyderabad a leader in AI and is in line with Central Government’s push for skill development and attracting global investments.

The State Government plans to establish and run Telangana Skill University in Hyderabad on a Public Private Partnership (PPP) basis in the current fiscal year, offering 17 industry-linked, practical, and job-oriented certificate, diploma, and degree courses. It is also planning to make Hyderabad a research center for advanced artificial intelligence, and building on the advances, Pearl City is also geared up for the Telangana Artificial Intelligence Summit themed ‘Making AI work for everyone’.

HIMTEX 2024 – A Gateway to a Vibrant Future

HIMTEX 2024 emerges as a timely event, perfectly aligned with the Government’s vision of ‘Viksit Bharat’. Government’s new scheme aims at incentivizing additional employment in the manufacturing sector. This forward-thinking strategy will not only create job opportunities but also encourage the hiring of fresh talent, drive economic growth, and foster innovation.

Hosted by Hyderabad International Trade Expositions Limited (HITEX), HIMTEX is poised to spearhead India’s economic transformation, rendering it a crucial event for industry leaders, innovators, and policymakers.