Ease of Doing Business for MSMEs: Manufacturers across multiple sectors have sought support for their micro, small, and medium enterprises (MSMEs) among measures proposed to revive and accelerating growth. According to FICCI’s latest quarterly (Q2) survey of over 300 SME and large manufacturers to gauge the outlook for manufacturing activity in the July-September quarter of FY22, capital goods businesses have suggested supporting MSMEs with respect to the business environment, improving and rigorously implementing Make in India policies, and taking immediate steps to boost demand. Likewise, manufacturers in metal and metal products have suggested increasing pace of reforms and speedy implementation of various government projects along with a cap on the maximum interest rate that can be charged by banks to MSMEs. The majority of toymakers have also suggested lower rates for raising finance for MSME players as their Covid-hit manufacturing growth is expected to take at least nine more months.
However, the overall growth outlook for automotive, capital goods, cement and ceramics, chemicals, fertilizers and pharmaceuticals, electronics & electricals, metal & metal products, paper products, textiles, textiles machinery, toys, and miscellaneous sectors has improved significantly in Q1 from Q1, the survey noted. “The percentage of respondents reporting higher production in the second quarter was much above the 50 per cent mark- around 61 per cent. This was significantly higher than the similar percentage of last year’s Q2 quarter (around 24 per cent). This assessment is also reflective in order books as 72 per cent of the respondents in July-September 2021-22 expected a higher number of orders vis-à-vis April-June 2021-22,” the survey added.
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The government had launched the Interest Subvention Scheme for MSMEs in November 2018 for banks to provide an interest relief of two per cent per annum to eligible MSMEs on their outstanding fresh/incremental term loan/working capital during the period of its validity. Under the scheme, the number of beneficiaries and amount were 13,62,355 and Rs 541.51 crore during 2019-20 and 9,08,860 and Rs 431.07 crore respectively during FY21, according to the data shared by the MSME Minister Narayan Rane in Lok Sabha last month.
Importantly, the government had last year in May capped the interest rate charged by banks and financial institutions on collateral-free loans at 9.25 per cent and 14 per cent on loans given by non-banking financial companies (NBFCs). According to MSME Ministry’s FY21 report, there were 1.96 crores (31 per cent) manufacturing MSMEs of a total 6.33 crore in comparison to 2.3 crores (36 per cent) MSMEs in trade, and 2.06 crore (33 per cent) MSMEs in other services.