MSME sector expects policy impetus to accelerate growth
For years the micro, small & medium enterprises (MSME) sector has functioned as a pillar of strength for the national economy as well as a bulwark against both domestic and global economic shocks. The sector accounts for 38% of the national GDP, facilitated by over 36% share of industrial output, exports and employment. There is high expectation in industry that the government will provide the impetus to accelerate the sector’s growth.
It is happy to note that in the last seven months, the ministry of MSMEs has come out with various schemes and programmes for promoting and handholding the sector. The major initiative for which CII would like to commend the ministry is on steps taken for revising the definition of MSMEs and amending the MSMED Act for a special dispensation for revival and exit of firms.
The ministry has also taken focused initiatives for village industries in border, hill and left wing extremism-affected areas; revamping the Scheme of Fund for Regeneration of Traditional Industries (Sfurti) and the Scheme for Rejuvenation, Modernization and Technology Upgradation of Coir Industry; a new scheme for setting up a Technology Centre Network to promote Innovation, Entrepreneurship and Agro Industry; improving the financial access of MSMEs through Credit Linked Capital Subsidy Scheme and Credit Guarantee Fund Trust for Micro and Small Enterprises schemes; and giving revised guidelines under the National Manufacturing Competitiveness Programme to emphasise zero effect on the environment.
The ministry is also chalking out plans for promoting skill development initiatives through PPP in setting up technical schools. More emphasis has been laid on creating an environment of Ease of Doing Business through the digitalisation of processes through a national portal for filing Entrepreneurs Memorandum, compilation of MSME schemes on the website and a virtual cluster initiative for a collaborative platform for academia and the government, which CII is happy to be a part of.
All this highlights the salience of the MSME sector in realising the Prime Minister’s vision to ‘Make in India’, which encompasses making India a manufacturing hub for quality products of international standards which are free from defects and adverse environmental impacts. Concerted efforts to enhance the productivity and global competitiveness of MSME manufacturing units will have a major bearing on India’s manufacturing growth.
Revision of the MSME definition to bring it in line with global standards has been a primary focus of CII’s policy advocacy efforts. Apart from the MSME ministry, the CII has also been working with the ministry of labour and employment for simplification and rationalisation of labour laws for SMEs through a Small Factories (R&E) Act, which is the need of the hour.
As suggested in a recent CII report titled, “The New Wave Indian MSME: An Action Agenda for Growth”, the sector needs reforms like factoring without recourse and incentives for timely payments for resolving delayed payments; dedicated ‘MSME equity funds’; ‘business mentoring services’ and ‘senior expert advisory services’ by national industry bodies to promote entrepreneurship; and proper implementation and disbursement of the R10,000-crore MSME Development Fund announced by the government.
The report has also called for creation of a ‘central climate friendly technology fund’; revision of the stringent and debilitating provisions in the new Companies Act, 2013; development of SME industrial corridors and land banks; allotment of vacant and disused premises in industrial estates to new or existing enterprises; online filing of returns; simplification and rationalisation of labour laws; labour inspection reforms; and a suitable exit/revival policy for MSMEs. The suggestions were accepted as productive and effective feedback by the ministry of MSME for inclusion in policy formulation.
The Indian MSME sector is poised for rapid growth and integration with major global value chains. Timely policy intervention and due support will go a long way towards making Indian MSMEs globally competitive. The New Year, hopefully, will see a series of policy initiatives to bolster the sector’s competitiveness and growth.
By Chandrajit Banerjee
The author is director general, CII