As broader SME-focused policy measures gather pace, automobile MSMEs are expected to benefit from increased access to equity funding, faster liquidity and compliance support, helping strengthen India’s auto and auto-component supply chains.
01 Feb 2026 | 238 Views | By Autocar Professional Bureau
From small auto-component makers in Tier II towns to emerging EV suppliers, automobile MSMEs are expected to benefit from a fresh mix of equity funding, faster liquidity and compliance support as broader SME-focused policy measures take shape.
Automobile MSMEs form the backbone of India’s vehicle manufacturing supply chain, accounting ...
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From small auto-component makers in Tier II towns to emerging EV suppliers, automobile MSMEs are expected to benefit from a fresh mix of equity funding, faster liquidity and compliance support as broader SME-focused policy measures take shape.
Automobile MSMEs form the backbone of India’s vehicle manufacturing supply chain, accounting for a large share of suppliers producing castings, forgings, stampings, wiring harnesses, plastics and electronics. While demand from OEMs has remained steady, many smaller suppliers continue to face challenges around access to growth capital, elongated payment cycles and rising regulatory requirements.
The proposed ₹10,000 crore SME Growth Fund, though sector-agnostic, is expected to provide equity support to scalable MSMEs, including those in the automobile and auto-component space. Industry executives say access to patient capital could enable suppliers to invest in automation, quality upgrades and capacity expansion as OEMs push for higher localisation and global-quality benchmarks.
Liquidity support has also gathered momentum through the Trade Receivables Discounting System (TReDS), with over ₹7 lakh crore already made available to MSMEs. Faster invoice discounting is helping smaller auto suppliers manage cash flows in an industry where payment cycles often stretch beyond 60 to 90 days.
Beyond funding, the proposed rollout of ‘Corporate Mitras’ in Tier II and Tier III towns could ease compliance pressures for MSMEs. With increasing requirements around taxation, ESG disclosures and quality certifications, affordable professional assistance may allow small manufacturers to focus more on production and innovation.
As India’s automotive sector moves into a new phase driven by electrification, electronics and exports, stronger MSMEs are expected to play a central role in building globally competitive supply chains.