Creating a bankable future for MSMEs

So how can this Catch 22 situation be solved? This problem can only be solved through institutional reforms aimed at reducing the inherent risk of the sector, thereby making them more attractive for banks and financial institutions to lend.

Institutional reforms

Making MSMEs more competitive and less risky

To ensure the competitiveness of MSMEs, it is essential that the availability of infrastructure, technology and skilled manpower are in tune with the global trends. Currently, the state of infrastructure, including power, water, roads, etc. in most areas where MSMEs are set up is poor and unreliable.

Although the central and state governments have set up a number of special economic zones, industrial areas and parks, industrial townships etc., there remains a lot still to be done. On the technology front, government and industry need to invest more in R&D. The government needs to enhance its support to the MSME sector for development, innovation and adaption of technology, without which these units stand no chance of survival on a global platform. Although India has the advantage of a large pool of human resources, the industry continues to face deficiencies in manpower, especially in the skill-set for areas like manufacturing, service, marketing, etc.

So skill development is a key area that needs to be addressed, both by government and industry, in

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