Rs 62,000-cr plan to give boost to MSMEs

The government is working out a Rs 62,000-crore financial plan for the micro, small and medium enterprises (MSMEs) to gain an edge in international markets, as many enterprises close down in US and the European Union, in the wake of the global recession.

MSME secretary Dinesh Rai told FE that the ministry has assessed the possibility of many IT, textile and auto component manufacturing companies in the US and the EU closing down in the heat of recession. ?In such a situation, Indian MSMEs can chip into these markets provided the sector is given proper support,? Rai said.

Keeping this into perspective, the government has set up a Skill Development Corporation, with a Rs 1,000-crore corpus, to be topped up every year.

Besides this, the MSME ministry has formulated a national fund for the unorganised sector (NAFUS) with a corpus of more than Rs 1,000 crore. The ministry is also pitching with the Reserve Bank of India (RBI) that at least 15% of the priority sector lending goes to the MSME sector, Rai added.

According to ministry officials, the Skill Development Corporation wants that more and more private sector MSMEs come up with proposals of training their work force in such a manner that their output matches global standards.

The corporation is open to imparting training to at least 40,000 people with the Rs 1,000-crore fund. A maximum of Rs 30 crore can be disbursed to each private sector MSME, which submits a proper training plan to the corporation. ?We aim to have 500 million skilled people in India by 2022,? Rai said.

The NAFUS would initially be at the disposal of the Small Industries Development Bank of India (Sidbi). Sidbi, on its part, is likely to take Nabard?s help to manage the fund. Rai said, ?The NAFUS has been approved by the inter-ministerial group and is now waiting for the planning commission?s approval.? He, however, did not give any time line for the launch of the fund.

To provide more liquidity to the MSME sector, the ministry is lobbying with the RBI that 15% of the total priority sector lending goes to the MSME sector, which may inject Rs 60,000 crore more into the MSME financing system, officials said.

At present priority sectors like agriculture, education health and also MSME, get 40% of a year?s total bank lending, of which agriculture has a mandatory share of 18%. The ministry has proposed that the MSME sector be given a mandatory 15% share.

Last year, the MSME sector got around 12% of the priority sector lending, a ministry official said.