The Prime Minister?s task force on micro, small and medium enterprises (MSMEs) is considering formulation of a body similar to the Board of Industrial & Financial Reconstruction (BIFR) for revival or closure of nearly five lakh sick MSMEs in the country. It is also contemplating on creation of a Rs 1,000-crore fund to revive viable firms.
?The sub-group on exit policy for MSMEs has submitted its recommendation to the task force, suggesting establishing a BIFR-like entity that can recommend ways to reconstruct or close a sick MSME. In the absence of any such body, the sick units? are unable to either close down or operate,? a senior official in the MSME ministry told FE.
Out of 22.1 lakh registered MSMEs, close to five lakh were sick at the end of March 31, 2007, as per the fourth census conducted by the ministry concerned. According to Reserve Bank of India data, there would be more than one lakh sick micro and small units at the end of March 2009. West Bengal, Uttar Pradesh and Maharashtra account for most of such units. MSMEs employ more than 42 million people and contribute 40% to the country?s exports and 45% to industrial production.
The sub-group has also suggested setting up of a fund worth Rs 1,000 crore to revive the viable MSMEs. The suggestions have come after the industry asked for separate norms for insolvency and bankruptcy of MSMEs in August.
In a meeting with Prime Minister Manmohan Singh in August, MSMEs, along with key industry chambers, demanded changes in labour laws, higher credit, procurement policy and better marketing facilities. Following this meeting, Singh set up the task force under the chairmanship of his principal secretary TKA Nair. The panel, in turn, formed seven sub-groups to give suggestions to sort out various issues faced by the industry.
?The task force has reached a consensus on the need to revise the labour laws for the benefit of MSMEs. There is also a requirement to increase bank credit to the sector,? MSME secretary Dinesh Rai said. The task force is contemplating on the suggestions given by the sub-groups and is likely to finalise its recommendations to the Prime Minister by the end of this month.
