Ease of Doing Business for MSMEs: The biggest learning for the MSME sector from the pandemic is that businesses need to be on digital platforms if they want to survive and grow but most micro and small units haven’t realised it yet, said Alka Nangia Arora, Joint Secretary (ARI Division), MSME Ministry, and CMD, National Small Industries Corporation (NSIC) on Thursday. Highlighting the importance of being globally competitive through digital channels, at the Financial Express Online’s The ScaleUp Summit, Arora said, “The competition today is not between two entrepreneurs, it is about being part of the global value chain. If we are a part of it, then only we will survive and grow.”
“It is not about what is being produced where, it is about the value addition we do to a product and how we make it a global brand that everybody wants. MSMEs will have to become a part of these global value chains and work in sync with other countries,” added Arora.
MSMEs in the country have a share of around 48 per cent of India’s total exports. The government intends to increase to 60 per cent by the financial year 2025 in order to make more MSMEs competitive across the world. Currently, NSIC also facilitates online marketing services for MSMEs through its MSME Global Mart portal. During 2020-21, 46,034 units were registered under the B2B portal while 11,105 MSMEs had enrolled till December 2021 in the current financial year, as per the MSME Ministry’s annual report 2021-22.
Arora said in order to help MSMEs take centre stage in global space, the biggest change brought by the government during the pandemic was the revision in the MSME definition. The classification of MSMEs is now based on the composition of investment in plant and machinery as well as the turnover of the business instead of only investment as per the previous classification.
“If we look at the previous definition, we were no match to anything that was happening globally. It is not about what we are doing in India. If I have to export then I need to understand the language which the other countries are speaking. The definition change has allowed many MSMEs to take centre stage in global space,” said Arora.
The government currently runs the public procurement service through a monitoring portal Sambandh that tracks the purchase of goods and services by government departments and central public sector enterprises (CPSEs) from micro and small businesses. The programme aims at better participation of small manufacturers and service providers in public procurement which is a key economic activity of the government.
While CPSEs have been surpassing their annual 25 per cent procurement target from micro and small enterprises (MSEs) over the past few years, the procurement specifically from women and scheduled caste/scheduled tribe (SC/ST) entrepreneurs owned MSEs has remained below the targeted three per cent and four per cent respectively. In fact, the procurement has remained below 0.80 per cent in both categories, as per data from the Sambandh portal.
“We haven’t reached the targets but some CPSEs are doing extremely good work. There are gaps, especially in the SC/ST segment. But I’m happy to say that we have made a dent in the space and we have many SC/ST entrepreneurs who are doing extremely well with the support of the National SC/ST Hub,” said Arora.
During the pandemic, the government had connected with at least 50-60 countries through virtual conferences and webinars to enhance MSMEs’ participation in export to these markets. Arora said the ministry had announced the First Time Exporters scheme to help new exporters with learnings on what can be exported, how products have to be exported and where they have to be exported.
Likewise, from the NSIC side, “we are looking at how do we help MSMEs by getting cheaper raw materials and make them part of the global supply chain,” said Arora.
Importantly, NSIC has also been allocated a Rs 10,000 crore fund for a 15-year period “to focus on MSMEs with the potential to go big. Many MSMEs have to become global champions and we need to scale it up,” said Arora without disclosing the details about the fund.