Lok Sabha Polls 2024: Better MSME Credit Access, Support For Green Switch On Industry Wishlist

Ahead of the Lok Sabha elections of 2024, expanding funding options for both capital expenditure and working capital for micro, small, and medium enterprises are part of the industry wishlist, according to the Confederation of Indian Industries.

The hope is to see initiatives like the Emergency Credit Line Guarantee Scheme formalise into a first-loss fund, said CII President Ramachandran Dinesh, while noting that the new government coming to power should continue to focus on MSME support.

The main factor of the broader funding access plan is systemic reforms, such as creating a formal mechanism for better rating support for MSMEs, in order to give them access to formal funding.

"If we can get a mechanism of rating, which then allows them (MSMEs) to access funds from the formal sector or through the fintech sector, that would create better opportunities to grow," Dinesh told NDTV Profit in New Delhi.

Help in green transition and funding aid for MSMEs to complete their digital journey were some of the other MSME-focused support that the industry body would like to see extended.

"From an industry perspective, we want high growth to continue and we want inclusive growth... We would like to see big-ticket reforms in land labour and to an extent in agriculture," Dinesh said.

Cutting across sectors, focus on social spends like education and healthcare, support for inclusive growth in terms of female employability and startup growth are some of the other broad themes on the CII's wishlist.

Private Capex Pick-Up

Beyond companies engaged in cement and steel sectors, proof in the pick-up of private capex has been a sought-after question. Private sector capex is happening and the percentage of private sector contribution in the total capex has maintained its level, Dinesh said.

In FY23, this stood at 36.7%, and with final figures yet to be published, he expects similar growth in FY24 on the back of increasing capacity utilisation and stronger balance sheets, he said.

Automotive, auto components and chemicals are some of the sectors crossing 90% capacity utilisation, according to Dinesh. "75-90% of capacity utilisation is the sweet spot for investing... So, it's really a question of time."

The Biggest Uncertainty

In a year that has been marked by uncertainties on the export front, geopolitical volatility continues to be the government's, economists' and industry's biggest headwind. Commenting on prospects for FY25, the industry body head said there is growing resilience among Indian exporters.

"Yes, we are positive about exports... Traditional sectors like auto components, leather exports continue to exhibit positive sentiments. And, there are new opportunities as we become more competitive in product manufacturing," he said.

However, concerns like the adaptability of Indian industry to global changes like the carbon border adjustment mechanism continue to rock the boat, as India mulls its own carbon tax alternative. The industry body is engaging with the government to seek a resolution, he said.