Budget will give manufacturing a boost: SMEs

For small and medium enterprises (SMEs) in the northern region, the Union Budget may not provide much by way of immediate gains, but they believe that manufacturing will get a boost. Units engaged in making auto components, electronic components and those catering to information technology hardware expect the relaxation in SAD (special additional customs duty) and excise duty rollback to spur manufacturing activity.

Although no exclusive concessions have been announced for SMEs in the Budget speech, they are optimistic about the thrust on infrastructure development.


According to R S Sachdeva, a senior member of the PHD Chamber of Commerce and Industry at Chandigarh, the guidelines on investment in the Budget will stimulate demand, and SMEs will benefit.

He added that by abolishing SAD, the government has provided a level playing field for manufacturers as well as traders. Earlier, a four per cent SAD was available to traders in electronic components but manufacturers did not get any such concession. This will encourage domestic manufacturing, he said.

The rollback of excise duty from 10 per cent to 6.5 per cent on procuring electronic components from domestic players would also consolidate the domestic manufacturing sector.

"We are largely dependent on imported components because these tiny components are not available locally. Despite huge demand, entrepreneurs refrain from setting up such units due to the unviable tax structure. India is the most competitively placed country in manufacturing due to low wages, but the cumbersome duties dissuade the small manufacturers from expanding and diversifying. The initiatives in the Budget may help entrepreneurs to foray into new segments," said Sachdeva.

Rakesh Aggarwal, a veteran of the Punjab industry scene, said that the revised norms for ESI and provident funds, that make the contribution of an employee optional, would also help SMEs. This will bring more transparency into the working of SMEs and help them carry out their day-to-day operations in a systematic way, he said.