Plight of MSMEs; here’s what is making Indian small businesses globally uncompetitive

Published: July 9, 2019 6:04:52 PM

Choppy capital flows are crippling India’s MSME (micro, small and medium enterprises) sector.

Aadhaar can be used for cash transactions beyond Rs 50,000 in place of PAN: Revenue SecyIntellectual Property Rights can help to reduce competition by keeping rights of its own plans and ideas.

By Samrat Sharma

Choppy capital flows are crippling India’s MSME (micro, small and medium enterprises) sector. The resulting lack of access to latest technologies is affecting the capability of Small and Medium Enterprises to compete in the global market, according to the Union Minister for Micro, Small and Medium Enterprises Nitin Gadkari. MSMEs have been running low on capital and the bank credit to the sector is also volatile. Bank credit to MSMEs is much lower in comparison to large cap companies. According to the recent Economic Survey, back in October 2017, growth rate of bank credit to MSMEs and large cap companies were equal at around 1%. However, since then, the growth rate of bank credit in large cap companies has reached to 7-8%, whereas the same in MSMEs has stuck between 1-2% only.

In order to fill this gap, Ministry of MSME introduced a scheme named Credit Linked Capital Subsidy and Technology Up-gradation Scheme (CLCS-TUS) to support SMEs in accessing latest technologies. One of the components under the schemes is Credit Linked Capital Subsidy (CLCS) under which capital subsidy up to Rs 15 Lakh is provided to Micro and Small Enterprises for accessing modern technology, Gadkari informed in a written reply to Rajya Sabha question.

Other government measures aimed at increasing competitiveness of MSMEs are as follows:

 Building awareness of Intellectual Property Rights (IPR)

Intellectual Property Rights can help to reduce competition by keeping rights of its own plans and ideas. These rights can be in the form of patents, copyrights, trade secrets and copyrights.

Undertaking digital empowerment initiatives

Digital empowerment can increase the reach of the MSMEs and therefore it can help to increase the market size.

Supporting entrepreneurial and managerial development through Incubators

Incubators provide a safe platform for the small businesses to grow under supervision. Incubation reduces the risk of the fall out at an early stage and imparts proper guidance.

Adopting lean manufacturing practices

Lean manufacturing allows companies to reach the operational efficiency by minimizing waste within a manufacturing system.

Enabling ZED Certification

Zero Defect and Zero Effect (ZED) certification helps to boost the quality to make the MSMEs more competitive in the market.

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