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Economists Emphasize Employment Generation and Manufacturing Boost in Upcoming Budget

Economists Emphasize Employment Generation and Manufacturing Boost in Upcoming Budget

During a pre-Budget consultation with Finance Minister Nirmala Sitharaman, economists stressed the importance of focusing the upcoming Budget on employment generation and strengthening the manufacturing sector. Highlighting concerns over unemployment, they urged the government to prioritize job creation. There was a consensus that with the economy showing resilience, stimulating consumption demand would not be a significant challenge.
Economists participating in the consultation, including National Co-convenor of Swadeshi Jagran Manch Ashwani Mahajan, Director and Chief Executive of the Institute for Studies in Industrial Development (ISID) Nagesh Kumar, and TCA Anant, emphasized these priorities.

Key Points from the Consultation

– Employment Generation: Economists highlighted unemployment as a major issue and recommended the government focus on creating jobs.
– Manufacturing Sector: Emphasis was placed on promoting the manufacturing sector, with a particular focus on MSMEs and the textile industry. Nagesh Kumar suggested expanding the scope of the Production Linked Incentive (PLI) scheme.

Statements from Participants

After the meeting, Ashwani Mahajan mentioned that “unemployment is a big issue, and the government should focus on generating jobs.” He added that given the economy’s resilience, consumption demand would not pose a problem.
Nagesh Kumar noted the need to push the manufacturing sector and called for incentives to support MSMEs and the textile sector. He also recommended expanding the PLI scheme to further promote manufacturing.

Official Statement

The Ministry of Finance posted on X (formerly Twitter) about the meeting: “Union Minister for Finance & Corporate Affairs Smt. @nsitharaman chairs the first Pre-Budget Consultations with leading economists in connection with the forthcoming General Budget 2024-25 in New Delhi, today.” The post also mentioned the attendance of Union Minister of State for Finance Shri @mppchaudhary, Finance Secretary, and other key officials.

Upcoming Budget Presentation

Finance Minister Nirmala Sitharaman is expected to present the Union Budget for the 2024-25 fiscal year in the last week of July.

June 20, 2024
Study Outlines Path for India to Achieve $5 Billion Defence Export Goal

Study Outlines Path for India to Achieve $5 Billion Defence Export Goal

A recent study by Nexgen Exhibitions underscores the critical steps India must take to reach its USD 5 billion defense export goal by 2024-25. The key strategies include streamlining foreign direct investment (FDI), enhancing Research & Development (R&D), and boosting manufacturing capabilities. This comprehensive study involved over 130 national and international manufacturers of arms, ammunition, and security equipment.
Key Insights from the Study
Streamlining FDI and Enhancing R&D and Manufacturing
Conducted across 15 cities in India, the study emphasizes the need for streamlined FDI inflows and elevated technology integration, including AI and other advanced technologies. A robust skill development ecosystem is also essential to create a pool of industry-ready professionals, enhancing India’s manufacturing capabilities.
India’s Emergence as a Global Manufacturing Hub
By bolstering R&D and manufacturing, India’s homeland security and defense sectors are poised to become global manufacturing hubs. The study points out the importance of increasing procurement categories to boost domestic defense manufacturing. Currently, India exports defense equipment to over 75 countries, demonstrating its expanding influence in the global defense market.
Advanced Technologies and Disaster Management
The homeland security sector is crucial for maintaining internal stability and protecting national interests. Integrating advanced technologies and data analytics is essential for effective threat detection, surveillance, and response. AI and machine learning can significantly improve risk prediction and mitigation. Additionally, a robust disaster management mechanism ensures preparedness and swift response to emergencies, enhancing public safety and national resilience.
International Police Expo 2024
The International Police Expo, set for July 4-5, 2024, in New Delhi, will bring together global and domestic manufacturers, suppliers, and innovators. With participants from over 25 countries, including the UK, USA, Israel, and Germany, the expo will showcase the latest innovations and technologies. This event provides a platform for international collaboration and the exchange of best practices, shaping the future of policing and homeland security.
A spokesperson for Nexgen Exhibitions remarked, “The International Police Expo facilitates connections between global and domestic manufacturers, suppliers, and innovators, fostering discussions on the key priorities shaping the future of policing and homeland security.”
Conclusion
The study concludes that India’s path to achieving its USD 5 billion defense export goal by 2024-25 hinges on streamlined FDI, enhanced R&D, and manufacturing capabilities. Government support through policies and incentives, coupled with strategic partnerships and technological advancements, is crucial for positioning India as a global defense manufacturing hub.

June 19, 2024
Bolstering the Aerospace Sector: The Vital Role of MSMEs and the Need for Government Support

Bolstering the Aerospace Sector: The Vital Role of MSMEs and the Need for Government Support

The Indian aerospace and defense market is projected to soar to USD 54.4 billion by 2033, a significant leap from its valuation of USD 27.1 billion in 2024, growing at a CAGR of 6.99% during the forecast period. This rapid growth, highlighted by Custom Market Insights, underscores the sector’s dynamic expansion fueled by increasing manufacturing demands from both domestic and international aircraft carriers. This surge necessitates advancements in innovation and technology for the design, development, and production of critical components and systems, including aircraft engines.
To meet this burgeoning demand, top industry players like Hindustan Aeronautics Limited (HAL), Tata Advanced Systems Limited (TASL), and L&T Aerospace must collaborate with smaller, technologically adept players. Here, Micro, Small, and Medium Enterprises (MSMEs) become indispensable. Known as the backbone of the Indian economy, MSMEs foster innovation, generate employment, and promote equitable development. Their agility and expertise in producing a wide range of aerospace components make them vital to the supply chain, ensuring timely delivery to manufacturers and distributors, unlike larger organizations burdened by bureaucratic processes.
Recognizing the importance of a robust supply chain, the Indian government is pushing for “Make in India,” particularly in the Aerospace and Defense (A&D) sector. Samir V. Kamat, Secretary of the Department of Defence R&D and Chairman of DRDO, emphasized the government’s aim to increase indigenous content in the defense and aerospace sector to over 70% in the next 3-4 years, highlighting the critical role of MSMEs in this endeavor. This push was echoed by Prime Minister Narendra Modi during the 2015 Aero India Air Show, reinforcing the theme of ‘Make in India’.
Government initiatives like the Defence Offset Policy encourage the development of synergistic sectors such as civil aerospace and internal security, providing special incentives for MSMEs. Regular interactions with vendors and stakeholders help address concerns, fostering a collaborative environment.
While reduced imports and record-high defense exports in A&D are promising, further improvements are needed for India to compete globally. Service or product-linked incentives could foster collaboration between large companies and MSMEs. Simplifying regulations for cross-border transactions with global supply chains and striving for self-reliance in the aerospace industry are crucial steps. Additionally, a clear Aerospace Policy, an independent nodal agency for collaboration, and increased government spending focused on small startups, MSMEs, and academia are necessary to fuel research and development for sustainable growth.
The future of the Indian aerospace sector hinges on the symbiotic relationship between big companies, MSMEs, and the government. By introducing industry-friendly schemes, addressing regulatory challenges, incentivizing partnerships, and promoting large-scale manufacturing, India can emerge as a global aerospace hub, competing with world leaders.

June 18, 2024
New Challenges and Opportunities for the Dairy Industry Amid Changing Customer Behavior

New Challenges and Opportunities for the Dairy Industry Amid Changing Customer Behavior

The dairy industry is currently navigating a landscape rich with opportunities and challenges. New sources such as plant-based dairy alternatives and a focus on sustainability, including precision farming and automation, are reshaping the sector. Additionally, the industry is expanding into new markets.
Ravin Saluja, Director of Sterling Agro Industries (Nova Dairy), highlights that the growing emphasis on health and wellness offers significant potential for dairy FMCG companies. “Consumers are increasingly seeking functional dairy products enriched with probiotics, vitamins, and minerals, catering to diverse dietary needs and preferences. By leveraging scientific research and innovation, dairy brands can capitalize on this trend to offer products that promote overall well-being and address specific health concerns,” Saluja explains.
The increasing popularity of plant-based diets and rising lactose intolerance have fueled the demand for dairy alternatives. “FMCG companies have the opportunity to diversify their product portfolios by introducing plant-based dairy alternatives made from almonds, soy, oats, and other plant sources. Embracing this trend enables dairy brands to tap into new consumer segments while contributing to sustainability goals and reducing environmental impact,” Saluja adds.
Aman J Jain, CEO and Co-Founder of Doodhvale emphasizes the importance of adapting to new trends. “Dairy brands should consider developing digital marketing approaches, interacting with customers on social networks, and offering personalized experiences. Steps toward long-term sustainability, transparency in production processes, and the use of sustainable materials can appeal to specific customers. Functional dairy products, plant-based and fortified creations can address various dietary choices and health needs,” Jain states.
Challenges for the Dairy Industry
The dairy industry faces mounting pressure to address sustainability and environmental challenges, such as greenhouse gas emissions, water usage, and animal welfare concerns. “FMCG companies must adopt sustainable practices throughout the value chain, from sourcing raw materials to packaging and distribution, to mitigate environmental impact and meet consumer expectations for ethical and eco-friendly products,” says Saluja.
Compliance with stringent regulatory requirements and quality standards also presents a challenge, particularly in a globalized marketplace with diverse regulatory frameworks. “Ensuring product safety, traceability, and adherence to labeling regulations is essential to maintain consumer trust in dairy products. FMCG companies must invest in robust quality assurance systems and compliance measures to navigate regulatory complexities and uphold industry standards,” Saluja notes.
Economic uncertainty, geopolitical tensions, and market volatility are significant challenges, affecting supply chain stability, pricing dynamics, and consumer spending patterns. Fluctuations in commodity prices, currency exchange rates, and geopolitical developments can disrupt operations and profitability, necessitating agile and adaptive strategies to manage risks and seize opportunities in dynamic market environments.
“The main problems that dairy industries face are fluctuating raw material prices, increasing regulatory measures, issues around emission reduction and water usage, ethical concerns for animal welfare, the shift in consumer behavior towards non-animal-based products, and the increasing prevalence of lactose intolerance and dairy product allergies,” Jain elaborates.
Furthermore, supply chain disruptions, workforce shortages, and the pressure to maintain sustainable operations add to the industry’s challenges.
Despite these challenges, stakeholders agree that the dairy sector has a promising future, provided it adapts effectively to changing consumer preferences.

June 17, 2024
Government Needs to Review Unfavorable FTAs: CII Chairman

Government Needs to Review Unfavorable FTAs: CII Chairman

NEW DELHI: The government should reassess free trade agreements (FTAs) with countries like South Korea and ASEAN members that have not been advantageous for India in terms of market access, stated Sanjiv Puri, Chairman of the Confederation of Indian Industries (CII). However, he noted that trade agreements with the UK, EU, UAE, and Australia have been beneficial for the Indian economy.
The Global Trade Research Initiative (GTRI) in Delhi reported that India’s merchandise trade deficit surged by 302.9% with ASEAN countries and by 164.1% with South Korea. This comparison was made using data from the pre-FTA period (2007-09) and the period between 2020-22. India had established trade agreements with these countries in 2010-11. During these periods, India experienced a higher growth rate in imports compared to exports when trading with these nations.
Puri also highlighted the potential for the production-linked incentive (PLI) scheme in sectors like textiles and toys, citing its success in new-age and traditional sectors.
“PLI schemes have been effective in new-age sectors and traditional sectors like food processing. Given their success, we can extend them to labor-intensive sectors and link them to the employment index,” he added.
Addressing concerns about slow growth in the manufacturing sector, Puri remarked, “Recent policy interventions have strengthened financial sector balance sheets, improved corporate balance sheets, rationalized corporate income tax, and introduced PLI schemes and FTAs. These measures have positively impacted manufacturing, and we are moving in the right direction.”
He emphasized the need to build on this momentum through continued reforms in factors like cost, land, labor, and improving ease of doing business to make the ‘Make in India’ initiative more competitive.
Puri also expressed optimism about a revival in rural consumption, given favorable monsoon predictions.

June 17, 2024
India’s Electronic Manufacturing Set to Double to $250 Billion in Five Years: Report

India’s Electronic Manufacturing Set to Double to $250 Billion in Five Years

India’s electronic manufacturing sector is poised for significant growth, with projections indicating it will double to around $250 billion in the next five years, according to a report from The Economic Times. This growth would elevate the sector from its current value of $125-130 billion in electronic exports.
To combat unemployment, the government is targeting job creation in the electronic manufacturing sector, aiming to double the current workforce of 2.5 million to around 5 million in the same timeframe.
“Our focus remains on providing services to digital technology and expanding large-scale electronics manufacturing. These targets will only accelerate,” stated Ashwini Vaishnaw, Minister for Electronics and Information Technology.
The report highlights India’s shift from import substitution to becoming self-reliant (Aatmanirbhar) and an export-led manufacturer, especially in segments like mobile phones. The country is also working towards self-reliance in laptop manufacturing.
The Indian government has earmarked Rs 760 billion for electronic manufacturing through various incentive schemes. Despite this, India’s per capita electronic consumption remains at one-fourth of the global average.
Currently, a significant portion of India’s electronic imports come from China (44%) and Hong Kong (16%). On the export front, mobile phones and Electronic Control Units (ECUs) dominate, with the United States and the UAE being the largest export destinations.
Experts note that India’s electronic manufacturing sector is undergoing a transformation, strengthening the country’s position as a global electronics manufacturing hub.
To further this goal, the government has launched several initiatives, including the Production Linked Incentive (PLI) Scheme for large-scale electronics manufacturing, PLI for IT hardware, the Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS), and the Modified Electronics Manufacturing Clusters Scheme (EMC 2.0).
Additionally, the government has introduced the Semicon India Program with a $10 billion incentive outlay, aiming to develop a sustainable semiconductor and display ecosystem, further establishing India as a global hub for semiconductor and display manufacturing.

June 17, 2024
Women constitute 36% of workforce in Indian start-ups and SMEs, finds HerKey report

HerKey Report: Women Constitute 36% of Workforce in Indian Start-Ups and SMEs

A recent HerKey study revealed that women represent 36% of the workforce in Indian startups and SMEs. The HerKey DivHERsity Benchmarking Report 2023–24 found that women make up 34% of the workforce across all surveyed companies, which included 300 firms.
Large enterprises led with a 38% women participation rate at the entry level, although this figure drops to 19% at mid-management and senior levels. Notably, the proportion of women hired in C-suite roles has decreased to 24% from the previous 37%, indicating a need for stronger measures to support women’s advancement to top leadership positions.
Neha Bagaria, Founder & CEO of HerKey, commented on the findings: “Women don’t face a constraint on ambition—they face a constraint on opportunity. The DivHERsity Benchmarking Report underscores the need for continued efforts to elevate women to leadership roles.”
The study highlighted that 84% of surveyed companies have initiatives dedicated to recruiting women, with 98% of large enterprises committed to gender diversity goals in hiring. Among these, 88% successfully met their objectives. Startups and SMEs are also making strides, with a 97% success rate in achieving gender diversity goals.
Additionally, 82% of large enterprises and 67% of SMEs and startups have launched programs to hire women returning to work. These initiatives have been highly successful, with 93% of women in large enterprises and 83% in startups and SMEs being hired through such programs.
Founded in 2015, HerKey collaborates with over 15,000 companies across India, helping them to recruit women employees.

June 14, 2024
Startups Leverage ‘Value-Add’ Mentors for Growth

Startups Leverage ‘Value-Add’ Mentors for Growth

Shared resource model enables PE, VC firms to oversee management
Known for their expertise, ‘value-add professionals’ are becoming increasingly popular among private equity (PE) and venture capital (VC) firms. These firms are adopting a shared resource model, utilizing these experts to support their portfolio companies.
Under this model, experts are shared across various firms where PEs and VCs have invested. They suggest improvements in areas such as tech, legal, training, HR, operations, and brand building, implementing optimal methodologies. Typically, these professionals have extensive experience, having served as chief finance officers, chief marketing officers, or chief technology officers, or leading verticals like training, operations, and legal for at least 15-20 years.
According to TeamLease Services, India hosts around 1,700 VC and PE firms managing portfolios of about 15,000 companies. Approximately 35-40% of these firms, or 595-680 funds, utilize shared resources.
Firms like Motilal Oswal Alternates, Eximius Ventures, Elevation Capital, Prime Venture Partners, and Matrix Partners follow this model. Their shared resources teams collaborate closely with fund partners and portfolio company management teams.
Notable portfolio companies engaging shared resources include BimaKavach, Dairy Classic, Simpolo, Asian Footwears, Symbiotec Pharma, Ganesh Grains, Shuru, Vegapay, and Finarkein.
The shared resources concept has long been prevalent in established startup ecosystems such as the US and China. In India, it gained traction recently, especially following multiple corporate governance and ESG (environmental, social, and governance) issues.
“This model provides portfolio companies with access to expertise they may not have in-house or afford full-time,” said Vikram Ramasubramanian, partner at Inflection Point Ventures. Specialized mentors help establish robust frameworks, prevent mismanagement, foster transparency, integrate sustainable practices, and meet regulatory requirements, which are critical for long-term success.
The shared resources model allows startups to access expertise as needed, reducing overall costs. By leveraging mentors from shared resources, startups can save around 30-40% of their costs, depending on employee costs and numbers. This is because the need for deep expertise in every function on a full-time basis is low for most startups.
For example, a D2C company opening offline stores might only need an operations expert initially. Similarly, a startup might need a marketing expert when taking the digital route and understanding analytics.
Hiring CXOs can cost around ₹60-80 lakh per annum. Ravi Teja Gupta, founder of Guptaji Invests, emphasized that startup success depends more on spending than funding. “Many B2C startups spend around 30% on marketing, and many D2C companies spend around 40-50% on marketing. So, we hired proven experts in viral marketing,” he said. He added that some VC companies have increased their fund size and transitioned into PE companies by adopting this model.
The shared resources model benefits both funds and portfolio companies. For investors, it generates better results from portfolio companies and allows structured control without daily interference. It also protects startups from complications arising from poor corporate governance.
Vishal Tulsyan, MD and CEO of MO Alternates, noted that an organization is built by its support functions. “Every company must embrace tech significantly, but mid-sized companies often cannot afford a strong head of technology. Likewise, HR is a crucial function, but such talent is often unaffordable,” he said.

June 14, 2024
Compliance Burden Hampers MSME Chemical Units

Compliance Burden Hampers MSME Chemical Units

The extensive compliance requirements are stifling growth in India’s $220 billion chemical industry, particularly affecting MSMEs. Each unit in this labor-intensive sector must meet up to 635 compliance requirements monthly, posing a significant challenge, according to industry sources and analysts.
Rishi Agrawal, co-founder and CEO of TeamLease RegTech, noted, “Understanding the compliance needs is difficult for most MSMEs. The lack of training and skilled manpower further complicates compliance efforts.”
Frequent changes in regulatory and compliance norms exacerbate the issue. “For example, in the last week alone, there were 200 compliance changes, 700 in the past month, and approximately 1,963 in the current quarter,” Agrawal said. While large companies have in-house teams to manage these requirements, MSMEs face considerable difficulty.
Jaimin Vasa, chairman of the Gujarat Chemical Association, suggested, “There should be industry-specific general licensing instead of multiple regulations under various acts like the Factories Act, health, explosives, hazardous materials, and food safety.”
Compliance needs also vary by state, complicating matters for companies operating in multiple locations. Vasa added, “The government should simplify the application process and expedite clearances to assist units in meeting compliance requirements.”
Agrawal pointed out that rent-seeking is a major issue in obtaining the necessary registrations and licenses for manufacturing units. He suggested, “To address this, we need a controlled environment and support for private entrepreneurship. The rapid pace of digitalization can be a significant aid.”
India’s chemical industry is the sixth largest globally and third largest in Asia, accounting for about 11% of the country’s exports and projected to reach $1 trillion by 2040. The industry has improved significantly in the World Bank’s Ease of Doing Business rankings, rising from 142nd in 2014 to 63rd in 2019.

June 14, 2024
Manufacturing Sector Seeks Policy Continuity and New PLI Schemes Under Modi’s Third Term

Manufacturing Sector Seeks Policy Continuity and New PLI Schemes Under Modi’s Third Term

With the Narendra Modi-led NDA government commencing its third term, the manufacturing sector anticipates policy continuity, increased capital infusion, and new PLI schemes to strengthen India’s position as a preferred manufacturing hub and to enhance a robust and resilient supply chain ecosystem.
Industry insiders are optimistic about the coalition government. The entry of Chandrababu Naidu-led Telugu Desam Party (TDP) into the ruling alliance is seen positively, as Naidu, now Andhra Pradesh’s chief minister, is expected to drive reform and innovation, acting as a “force multiplier.”
“There is comfort in having just two main alliance partners with the BJP. Chandrababu Naidu is perceived as a progressive and forward-thinking politician, and Nitish Kumar, aiming to keep his prospects bright in Bihar, will likely push for the state’s development,” an industry body spokesperson told ET anonymously.
The coalition regime is expected to lead to a more “uniform distribution” of projects across various states.
“We anticipate more even project distribution among states. With BJP’s win in Odisha and its proximity to Andhra Pradesh, areas like Visakhapatnam might see increased industrial investment,” the spokesperson added. However, some officials expressed concerns that big-ticket projects might favor Andhra Pradesh due to Naidu’s influence, potentially intensifying competition between states for projects.
Overall, the TDP partnership with BJP is viewed positively, with Naidu seen as accessible and receptive. The appointment of a TDP cabinet minister for civil aviation is welcomed, as it could expedite approvals for regional airports in southern states.
“There’s no nervousness or uncertainty,” an electronics manufacturing industry representative told ET. “The coalition is seen as enhancing focus on manufacturing, benefiting the electronics sector.”
The manufacturing industry is eager for the continuation and expansion of successful PLI schemes from Modi’s second term, including new incentives for traditional sectors like textiles, cement, and leather.
In the electronics manufacturing industry, attention is on pending proposals with the India Semiconductor Mission (ISM) awaiting cabinet approval, with hopes for progress post the July budget.
In the automotive sector, expectations of policy continuity and a sustained focus on the Make in India initiative are fostering optimism.
“The general sentiment is very positive, with no expectation of losing momentum,” said Soumen Mandal, senior research analyst at Counterpoint Research. “In the automotive and heavy industries sectors, there’s a belief in continued policy direction, as these are major employment sectors that the government aims to further boost in their third term.”

June 14, 2024