Industry leaders hail Modi 3.0 Budget 2024-25 for strong support to MSMEs, fiscal prudence, and growth initiatives

"India's economic growth continues to shine while the global economy is still in the grip of policy uncertainty," she said during her presentation in the Lok Sabha.

She emphasised the government's efforts to curb inflation, noting that it has remained stable and is moving towards 4%. Despite geopolitical challenges, India stands out as a shining exception and is expected to continue doing so in the coming years, she said.

The major highlights of the Budget include changes in taxation, a reduction in customs duty on gold and silver, a taxonomy for climate finance, unchanged capital expenditure, special allocations for states affected by natural calamities, and an increase in Mudra loans to Rs 20 lakhs, among others.

Here are some more reactions from the industry leaders –

SBI Chairman Dinesh Khara said, “The Union Budget 2024-25 while pursuing fiscal consolidation is largely focused on private demand revival with a slew of fiscal measure targeting the middle class, MSMEs and employment generation. The thrust to agriculture productivity, infrastructure, climate transition and rationalization of capital gains taxation regime are the deeper facets of the transformation that Budget seeks to achieve. From banking perspective budget is pro-growth and offers scope for balance sheet expansion. In all, Budget remains well grounded in domestic and international realties and has chalked the best strategy for future."

Bank of Baroda Managing Director & CEO said the Union Budget complements the main takeaways from the Economic Survey and focusses clearly on medium term development of the economy.

The thrust on agriculture, skill development and MSMEs and consequently leading to employment generation will continue to be the main focus areas for the government in the coming years. The overall size of the budget has remained almost unchanged from the Interim one.

The budget has shown strong intent on moving along the fiscal prudence path and targeted the fiscal deficit at 4.9% for the year. The said action will keep the growth steady as well as robust not only for economy but also banking.

This will make it easier to touch the 4.5% mark in Fy26 as per the FRBM target. More importantly for the financial year the overall gross borrowing and net borrowings have been pegged at almost the same level as in the Interim Budget. This means that it is virtually neutral for the market in terms of liquidity and bond yields, which has positive impact on the economy.

The banking sector can see substantial positive takeaways from the Budget which goes beyond the neutral impact on liquidity. First, there is a focus on MSMEs with a credit guarantee scheme being brought in. Any support to the MSMEs will be positive growth of not just GDP but also employment. Second, at the retail level, there is emphasis on education loans which will also help in skill building that is the need of the day.

Third, the Budget speech also spoke about recovery and the focus will be on debt recovery tribunals. Fourth, the balanced regional development goal also includes setting up of more touch points in the North Eastern Regions which will help to make banking more universal.

Last the reiteration of the budget to encourage housing also means that banks will have a larger role to play in carrying out this programme at both the rural and urban levels.

Vedanta Ltd Chairman Anil Agarwal said the focus on job creation with three innovative employment-linked schemes is timely. The abolition of angel tax will give a big boost to our startups and young entrepreneurs who are the job creators of the future. The commitment to speed up IBC resolution will lead to 12000 businesses restarting operations and many more jobs. I am also delighted to see the announcement related to Critical Minerals Mission. India must explore, mine and process these metals of the future domestically.

AMFI Chief Executive Venkat Chalasani said Finance Minister Nirmala Sitharaman presented a growth-oriented budget. “The focus on fiscal consolidation without cutting down on capital expenditure with clear roadmap for “Viksit Bharat” is extremely positive,” he underscored.

The emphasis on job creation, skilling, a boost to the MSME sector as well as tax relief to the middle classes will add more income in the hands of the people.

The increase in exemption limit for Long Term Capital Gains tax from Rs 1 lakh to Rs 1.25 lakhs is a welcome change. While the changes in rates for LTCG and STCG were not anticipated, the markets will take them in their stride.

“We are happy to note that AMFI’s demand of change in definition of ‘Specified Mutual Funds’ under Section 50AA has been acceded to and will lead to rationalization in taxation for the funds affected hitherto,” he stated.

HDFC Securities MD & CEO Dhiraj Relli noted that the Union Budget on an overall basis is broadly positive despite the higher tax on capital gains and higher STT. The negative sentimental effect of the higher taxes may be over in a couple of days.

The sharp cutback in net borrowings and a cut in fiscal deficit could have a positive impact on interest rates and the attitude of foreign investors and rating agencies towards India. There exists a chance of a rating upgrade for India a few months down the line.

Investors are more concerned about possibilities to make money or gains rather than get too bothered by a 250 or 500 bps increase in tax rate from a low base. As of now the Indian market offers opportunities to make money and hence the move to raise capital gains tax may not dissuade investors. However, as the difference in the rates has risen to 750 bps from the earlier 500 bps, investors may, if all things stay the same, want to hold on to their investments for a longer period to avail of the lower rate, displaying better investor behavior. 

Also, the hike in the exemption limit from Rs.1 lakh to Rs.1.25 lakhs for LTCG is welcome and may offset to some extent the higher incidence of tax due to higher rates.An increase in STT rates may have some impact on depth and liquidity, especially in the F&O markets, post Oct 01, but Indians are adept at adjusting to emerging situations and we are not too worried about the medium-term implications of this rise.

Hinduja Group of Companies Chairman Ashok Hinduja said the budget shows Modi 3.0 is all about continuing the path to Fiscal Consolidation with the Fiscal Deficit target of 4.9% this year and 4.5% the next while maintaining the Capex figure at 3.6%.

“The focus on the agri sector and housing infrastructure - affordable and urban - is substantive and augurs well. Quite a few changes in taxation have been announced which needs a detailed study. Higher FDI is expected with a reduction in tax on Foreign Companies from 40 to 35%. Overall, a good budget for the macro Indian Investment Climate but could have been better for Indian Investors,” Hinduja noted.

Motovolt Mobility Pvt. Ltd. Founder &  CEO Tushar Choudhary lauded the Full exemption on customs duties for 25 critical minerals, including lithium, the Budget. This is expected to reduce battery costs and enhance domestic manufacturing capabilities. The 'Purvodaya' plan is another robust initiative that underscores the government’s commitment to fostering growth and innovation across the eastern states. By reducing import costs and encouraging regional development, this plan represents a significant step forward for our industry and the economy as a whole. Additionally, our products in the micro-mobility segment will benefit greatly from these measures, enabling us to offer more affordable and efficient solutions to consumers. This will particularly enhance our ability to cater to the urban and semi-urban markets, providing sustainable and cost-effective transportation options.

Wardwizard Innovations & Mobility Ltd Chairman & Managing Director Yatin Gupte said the announcement to fully exempt customs duty on critical materials, such as rare earth metals including lithium, can further incentivize electric mobility. We are looking forward to receiving the benefit of this exemption along with the sectors mentioned by the Hon’ble Finance Minister.  The focus on increasing women's participation in the workforce will also benefit the sector.

Gem & Jewellery Export Promotion Council (GJEPC) Chairman Vipul Shah opines that the Union Budget 2024 is a game-changer for the gems and jewellery sector.

The reduction in import duties on gold and silver to 6% and platinum to 6.4% is a major boost for our industry, enhancing affordability for consumers and competitiveness for the manufacturing sector by releasing working capital.

The abolition of the 2% Equalization Levy and introduction of the Safe Harbour Rule on sale of rough diamonds at SNZs will firmly establish India as a global rough diamond trading hub.

These combined measures will propel the sector’s growth, generate lakhs of employment opportunities by benefitting the small-scale jewellery manufacturers & exporters and diamond cutters and polishers, thus contribute significantly to India’s vision of becoming a Viksit Bharat by 2047.

Venus Remedies President Global Critical Care Saransh Chaudhary said the Central government’s decision to exempt three more cancer medicines from customs duty is a commendable step towards making cancer drugs more affordable.

It will also make oncology exports more competitive and incentivise manufacturers by reducing their costs.

We also welcome the Finance Minister’s announcement to include manufacturing & services and innovation, research & development among the nine priority areas identified by the government to ensure fast-paced growth inline with its vision of “Viksit Bharat”.

Pharma manufacturing being India’s strength, we expect the government to build on it with its incentive-based approach.

A renewed focus on innovation and R&D, on the other hand, will transform India into a value-driven economy, unleashing its immense potential wealth creation potential.

Zebronics Co-founder & Director Rajesh Doshi said the support for MSMEs and manufacturing includes long-term loans for machinery, credit guarantees, and establishing electronic manufacturing clusters, enhancing global competitiveness.

Skill development initiatives introduce new courses, revise loans, and develop National Industrial Corridors to connect top companies with CSR funds, aiming to benefit over 1 crore youth in the next five years.

The reduction of Basic Customs Duty on mobiles and accessories and PCDA is a strategic move to support these industries. Overall, steps to ease trade, reform manufacturing, and support the start-up ecosystem are vital. Reforms in solar, energy, agriculture, and education are crucial for holistic national development.

Notably, the commitment to enhance the inclusion of more women in the workforce by formulation of skill development programs and encouragement of more women entrepreneurs reflects the virtue of them being amongst the decision makers in the future.

Shriram AMC Senior Fund Manager Deepak Ramaraju said the budget has not been a big bang budget in terms of announcements or reforms. The government has tried to strike a balance between social reforms, growth, fiscal prudence and coalition partners.

Special packages to Andhra Pradesh and Bihar have been provided in terms of industrial corridors, infrastructure push and financial support for key projects.

This ensures the continuity of the coalition. The fiscal prudence is improved and the fiscal deficit is reduced to 4.9% of the GDP from 5.1%. The borrowing is pegged to Rs 14 L Cr which is less than last year.

This is positive for the overall economy. Hike in short-term capital gains and long-term capital gains have been sentimentally negative for the equity markets. This has resulted in short-term selling pressure. However, this can be the beginning of reforming the capital markets and curbing retail participation in the F&O segment.

We can expect more measures in the F&O space in the days to come. On the growth and social agenda, the government has clearly articulated the focus areas like agriculture, employment, skilling, infrastructure, inclusive social growth, manufacturing, infrastructure, urbanization, innovation and next-gen reforms.

The budget spending in the years to come will keep adding to these focus areas.

InCred Finance Head - Digital Business Loans Nishith Maheshwari noted that the growth of MSMEs was one of the key priorities in the budget, underscoring their critical role as the backbone of the Indian economy.

To facilitate easier financing for this sector, several initiatives have been introduced. Notably, credit guarantee schemes for equipment financing will bolster domestic manufacturing.

The loan limit enhancement under the PM Mudra Yojana from 10 lakh to 20 lakh will increase financial access to smaller family-owned businesses, propertierships etc.

Leveraging Digital Public Infrastructure in the agricultural sector will produce a wealth of new credit data for farmers, allowing agri-fintech companies to provide improved and more tailored credit solutions to their customers.

Malabar Group Chairman MP Ahammed noted that the reduction in import duty on gold has been a long-standing demand for gold retailers, and we are extremely grateful to the Union Finance Minister for addressing this issue in today’s Union Budget by reducing the duty from 15% (including cess) to 6%.

This move not only relieves consumers who have eagerly awaited this announcement but is also expected to boost gold demand in the country and create jobs for artisans.

High import duty often leads to increased smuggling of gold through illegal routes, which hampers the growth of the organized retail gold trade and results in revenue losses for the government.

It is expected that the duty reduction will drastically cut down gold smuggling, thereby curbing illegal trade and enhancing tax revenues. This reduction benefits organized retail jewellers, consumers, and the government, making it a positive development for all parties involved.

GRM Overseas Limited Managing Director Atul Garg stated that a provision of Rs1.52 lakh crore aimed at boosting productivity and resilience in the agriculture.

The introduction of high-yielding and climate-resilient crop varieties, promotion of natural farming, and digital public infrastructure for agriculture underscore the government's forward-thinking approach to sustainable development.

The emphasis on digital infrastructure, support for farmer cooperatives, and startups marks a new era of efficiency and innovation in farming. The plan to initiate one crore farmers into natural farming is a visionary step that will enhance productivity and promote eco-friendly practices.

Addressing long-standing challenges like fragmented supply chains, limited credit access, and outdated techniques, the introduction of the Jan Samarth-based Kisan Credit Card and the focus on bio-input resource centers will empower farmers with essential resources and financial support. Strengthening the production and marketing of pulses and oil seeds will improve self-reliance and boost incomes.

The government's commitment to capital expenditure and support for irrigation projects further reinforces its dedication to a robust agricultural infrastructure. These initiatives reflect a strong vision for the future, ensuring our farmers are well-equipped to face challenges and seize new opportunities. This budget paves the way for a more resilient and prosperous agricultural sector.

IndiaBonds. com Co-Founder Vishal Goenka said, “The budget demonstrated financial prudence with expected fiscal deficit target now 4.9% for FY24-25. This is constructive overall for the bond yields. The focus on infrastructure spending shall further increase issuance in infrastructure bonds. Listed bonds continue their favourable treatment for capital gains versus unlisted bonds and debt mutual funds.”

Capri Global Capital Limited Managing Director Rajesh Sharma said the robust support towards MSMEs, a vital backbone of our economy, in the Union Budget 2024-25 is commendable.

The budget's enhancements to the credit guarantee scheme, regulatory reforms, and financial packages reflect a strong commitment to creating a supportive environment for MSMEs to thrive and compete globally.

Notably, the budget also emphasizes affordable housing, which will further stimulate economic growth, improve asset quality, and create employment opportunities.

The focus on e-commerce export hubs and technological upgrades for traditional artisans will not only strengthen domestic growth but also position Indian MSMEs as key players on the global stage.

InCred Wealth CEO Nitin Rao said, “The Budget build up for long term measures is positive . Many key areas have a positive build-up without impacting the fiscal position. Taxation increases seem negative, though was anticipated. Markets will stabilise after the negative shocks in the short term and track the progress of the country in the medium term.”

Asit C Mehta Investment Interrmediates Ltd (Brokerage Firm) Head of Research Siddarth Bhamre the budget is economy-centric and especially targets grassroots issues like employment and rural economic stress. Multiple direct and indirect schemes and announcements will target the upliftment of the poor, women, youth, and farmers.

The finance minister has made this budget to enhance employment, increase skill sets, ease business for MSMEs, and provide tax measures for the middle class. From the capital markets point of view, it would be slightly disappointing as far as taxation is concerned. The economic measures announced are the need of the hour for rural employment and reduce stress in the MSME space. This budget has targeted the pain points in the economy.

This budget focuses on the rural economy, employment, and MSMEs. The biggest beneficiary from a stock market perspective will be consumption space especially FMCG and Auto (2-wheelers).

Essar Capital Operating Partner Vaidyanathan Srinivasan said the new budget's emphasis on ownership, leasing, and flagging reforms is an important step for the Indian shipping industry.

By simplifying registration processes and incentivising flagging of ships, we anticipate a significant revival in our national fleet's competitiveness.

This move will not only increase India's share in the global shipping market but also create substantial employment opportunities, marking a robust comeback from the drastic reduction in our global shipping share from 60% in 1969 to a mere 6% in 2020.

DSP Pension Fund Managers CEO Rahul Bhagat said the introduction of the NPS Vatsalaya scheme by the finance minister marks a significant step towards fostering a culture of long-term financial planning for minors in our country. This initiative allows parents and guardians to proactively invest in the future financial security of their children from an early age.

Under this scheme, parents can open and manage investment accounts on behalf of their minors, ensuring a structured approach to savings and investments. This not only instills a sense of financial discipline from a young age but also sets the stage for robust financial planning as children grow into adulthood.

One of the most compelling aspects of the NPS Vatsalaya scheme is its flexibility. As minors reach adulthood, these accounts can seamlessly transition into regular National Pension System (NPS) accounts, continuing to build upon the initial investments made during their formative years.

In essence, the NPS Vatsalaya scheme represents a forward-thinking approach by the government to empower families with the means to plan for their children's futures responsibly. It encourages savings and investment habits that will undoubtedly benefit our society as a whole in the long run.

Essar Capital Managing Partner Dhanpat Nahata said, “The budget's makes a strategic advancement towards India's energy security allocation for the development of small nuclear reactors and the research into new nuclear technologies. This initiative will not only enhance our energy mix but also accelerate the transition to sustainable energy sources. Essar is poised to benefit from these developments, driving innovation and sustainability within our operations and contributing to the nation's ambitious energy transition goals.”

Edelweiss Alternatives-Head Real Assets Strategy Subahoo Chordia said the government has maintained its allocation towards infrastructure sector at Rs 11+ lakh crores (i.e. 3.4% of GDP) and additional interest free loan of Rs 1.5 lakh crores to States will be a booster for the infrastructure segment.

The budget has lent further emphasis to multiple infrastructure segments towards development of roads, airports etc. Further, industrial parks, to service 100+ cities and development of 12 specific industrial parks under national schemes is envisaged.

The Government has lent further weight in its fight against climate change. The fiscal incentives for rooftop solar and pumped storage will enhance energy security and availability. Further indirect tax incentives towards renewable energy items and critical minerals such as lithium, copper bodes well for the segment.

Overall, the budget maintains its focus on long term growth and sustainability and is positive towards infrastructure segments.

upGrad Co-founder & MD Mayank Kumar said Budget 2024-25 allocations towards skilling and employment and Startup growth marks a watershed moment in India's journey towards becoming the world's largest talent economy.

With a very strong emphasis on skilling and employment and bridging the talent-academia gap, GOI's allocations—to fuel aspirations of 4.1 crore youths, empower women to join the workforce, and provide tax benefits and loans like Skilling loan (upto Rs 7.5 lakh) and Education loan (upto INR 10 lakh)—is a masterstroke, set to unlock India's demographic dividend and drive growth.

This budget is not just a financial plan but a blueprint for a brighter future where India's youth will thrive and continue to lead global job requirements.

Innovative initiatives announced, such as the scheme to boost job creation in the manufacturing sector, incentives for EPFO contributions, and reimbursement for additional employee EPFO contributions, demonstrate the government's commitment to creating a conducive employment ecosystem. India's economic growth, described as a "shining exception," will propel its focus on innovation and growth with a focus on job creation and skilling.

The skilling loan and education loan initiatives will further empower India's youth to drive growth and innovation.

The government's scheme to offer internships to 1 crore youth in 500 top companies over five years will bridge the industry-academia gap and enhance employability. This bold commitment towards jobs and skilling in Budget 2024-25 ignites a talent revolution, positioning India's youth for global leadership.

By abolishing angel tax, the government has given a major fillip to the startup ecosystem, fostering more investments, growth, and innovation in India, and enhancing its capabilities to cater to global demands. Additionally, the reduction of capital gains tax for unlisted equity aligns it with listed equity is another strong move, further boosting investor confidence and liquidity in the startup space.

Amazon India Spokesperson the announcement to set up ecommerce export hubs across the country through public-private partnerships is a welcome move.

This, in addition to reforms proposed by the RBI for cross-border payments will play a critical role in empowering Indian MSMEs to reach global markets. Ecommerce exports represent a sunrise sector for India and we are seeing growing adoption of ecommerce exports by Indian businesses through our Amazon Global Selling program.

We already have an MoU with the Ministry of Commerce (DGFT) to leverage Districts as Export Hubs initiative and boost MSME exports from India and will continue to collaborate with all stakeholders as we move closer to our goal of enabling $20 billion in cumulative ecommerce exports from India by 2025.

Muthoot Pappachan Group Chairman Thomas John Muthoot the 2024-2025 Budget is a transformative step towards India's economic future.

The Budget focuses on creating jobs, enhancing skilling, and supporting MSMEs with credit guarantees and expanded Mudra loans. It invests in rural development and social justice, with significant allocations for women and tribal communities, and improves infrastructure. Prioritizing agricultural productivity, employment, and infrastructure, the Budget promotes inclusive and sustainable growth. 

CREDAI West Bengal President and Merlin Group Chairman Sushil Mohta noted that the announcement of a Rs 2.2 lakh crore initiative to make urban housing more affordable, along with the proposed investment of Rs 10 lakh crore to address the housing needs of 1 crore urban poor and middle-class families, are positive steps toward urbanization.

Rental housing with dormitory type accommodation for industrial workers in PPP mode is the need of the hour and will provide better living condition for industrial workers.

The budget's emphasis on cities is noteworthy, and we welcome the decision to establish industrial parks in over 100 cities in partnership with the private sector. This will boost infrastructure development in various states.

The real estate industry will play a crucial role in achieving the country's sustainable development goals, with 40% of India's population projected to reside in urban areas by 2030. Overall, the budget is a positive move towards urbanization.

The new tax regime for the salaried class will reduce tax burden and provide more disposable income and additional support for their EMI in home loan re payment.

Furthermore, I welcome this growth-oriented budget, particularly its focus on women’s empowerment. This would enable more women to own properties, as the Finance Minister has urged state governments to lower stamp duties to encourage women-centric investments in real estate.

The women empowerment centric budget will also encourage states charge lower stamp duties to encourage women to buy and own properties. This will drive the growth of real estate as women are the deciding factors for purchasing the residential properties.