Manufacturing is one of the fastest growing sectors in the Indian economy. By 2020, it is expected that India will be the fifth largest manufacturing country in the world. The government has even introduced a ‘Make In India’ program to boost local manufacturing, and transform India into a manufacturing hub.
Small and Medium Enterprises (SME) in the manufacturing sector play a major role in contributing to the growth of the sector. These companies add jobs, and it is hoped that this sector will bring in 10 crore jobs by 2020, and increase its contribution to the GDP of India from 16% to 25% by 2022.
Moreover, the budget of 2018 has increased the customs duty on imported items, such as processed food, perfumes, toiletry preparations, electronics (including cellular mobile phones, smart watches / wearable devices), auto components, footwear, toys and furniture. This is hoped to boost the local manufacturing industry as well.
Additionally, there are several factors that affect the growth of the manufacturing sector, including good infrastructure, tax compliance, labour laws, environmental standards, etc. Funding is another major factor that affects manufacturing growth. From professional loan for engineers to peer-to-peer funding, to investors, there are several sources of funding available for businesses in the manufacturing sector. Let’s take a closer look at these different types of funding:
Self-funding is essentially funding your business by yourself. This could be from your savings, through re-mortgaging personal property, or even borrowing from your friends and family. You can also use your personal credit cards to fund your business. This is a common practice, and it allows you to pay for all your business-related expenses through the card. Your business profits can then repay the balance amount within the credit-free period, thereby allowing your business to get free credit for about 30-45 days.
Crowdfunding involves taking money/loans from a crowd to fund your business. You pitch your idea on a crowdfunding platform, and let the crowd pay for you. People will invest in you if they believe that your cause is worth investing in. In return, you can provide them with your products/goods. Crowdfunding is particularly great for manufacturing businesses looking to expand and/or introduce new products.
Finding investors for your manufacturing business is great, as they will be willing to take business risks with your firm. However, this also mean that you will have to share control and ownership of your company with said investors. Investing could occur in the form of seed funding/angel investing in which an investor purchases a part of your firm, or venture capital funding which is more for newly opened businesses.
Bank overdrafts are a short-term source of finance. Banks lend money to small businesses that have low or no bank balances. The company can then repay the bank when its cash flow improves. This is only good for seasonal manufacturing businesses with seasonal cash flow problems. However, these overdrafts also come at high rates of interest, so they are not ideal for long term requirements.
Professional Loans for engineers
Business loans from banks and NBFCs like Bajaj Finserv are also a great source of finance for manufacturing businesses. There are even professional business loans for different professionals like doctors, engineers, CAs, etc. Professional engineer loans, in particular, are a great choice for manufacturing businesses started and run by engineers. These loans come with customized features that make them flexible to suit a variety of needs, from purchase of equipment to improving your working capital.
Thus, engineer loans are a great source of funding that many small businesses might be missing out on. Bajaj Finserv offers professional engineer loans with many special features, such as flexi loan facility, flexible repayment tenors (of 12 to 60 months), minimal documentation requirements, quick processing, online account management, exclusive pre-approved offers, etc. Moreover, Bajaj Finserv also provide unsecured business loans you do not have to provide collateral to avail them. All you have to do is check your eligibility, the engineer loan interest rates, and apply online.