MSME’s: Engine for Growth

MSME’s: Engine for Growth

Contributes

• 8% of GDP
• 40% of the total exports
• 45% of manufacturing input

Keeping in view the contribution of MSME’s in the growth of Indian Economy, its development hasbeen assigned an important role in India’s national plans. Therefore, there is a need for the Government to take concrete steps in order to resolve those concerns which continue to thwart the growth of small and medium enterprises (SMEs) over the years

Action Plan for Make in India Initiative of MSME 

E-Governance:

Different procedures and lack of mutual trust leads to hidden costs and slow paralysis

• Strengthen the communication between stakeholders
• Establish a proper procedure pan-India
• Improve efficiencies in service delivery
• Public Participation to be enhanced via the integration of Social Media
• Building up of a database to measure the levels of productivity of the products
• Identification of products in need of research and development

Financial Inclusion:

High cost of credit, requirements of collateral, limited access to equity capital, lack of access to global markets, and the absence of a mechanism for the revival of sick enterprises

• Frame guidelines for micro and small enterprise financing; business, registration, regulation and accreditation of MFI entities; promoting right technology solutions; and formulating a credit guarantee scheme for loans given out to micro enterprises
• Financial Education of the borrowers for empowerment
• Statutory guidelines to stipulate penalties or interest for big corporations which delay payments to SMEs
• Skill development for bankers :
  • Standardising simple format for accounting purposes for MSMEs,
  • Competent development of human resources,
  • Cultivating business ethics and standards, and
  • Imparting training to MSMEs

Steps taken:

• All loans to come under Priority Sector Lending
• Micro Units Development and Refinance Agency (MUDRA) Bank expected to partner with coordinators at the State level to provide finance to SMEs. A corpus of Rs.20,000 crore has been allocated to the bank.
• The Union Budget has proposed to set up ‘Trade Receivables Discounting System’ (TreDs), an electronic platform that will facilitate financing of trade receivables from corporates and other buyers through multiple financiers.

Employment Generation & Skill Development:

MSMEs are labour-intensive and have the capability to create more jobs to cater to a young demographic country like India, where the climatic vagaries render many unemployed in the agricultural sector.

• Training of educated unemployed youth both in conventional and most advanced production and management technology/processes
• Developing Modular Courses and training of trainers
• Developing districts wise skill development needs and training providers.
• Up-scaling in collaboration with NSDC, Ministry of Skill Development, Entrepreneurship, Youth Affairs and Sports and Ministry of Labour and Employment

Steps Taken:

• Virtual Cluster web portal, to provide facilities like common application forms, credit scoring models etc. and a platform for Industry-Academia linkages has been set-up.
• Employment Facilitation Portal enables matching of job providers and job seekers

Technology and Energy Efficiency

• Compulsory procurement of materials by public sector units from SMEs
• Setting up of common research and development facilitation centres
• Up scaling cluster approach for infrastructure development and technology support
• Augmenting the past initiatives for further absorptions
• Steps to reduce wastages and innovative designs for waste-management

Zero Effect Zero Defect Manufacturing

• Promoting Lean Manufacturing Competitiveness Scheme (LMCS) in mini-clusters for Zero Defect manufacturing
• Promoting Energy Efficient Technologies using Clean Technology
• ZED Certification scheme in consultation with QCI, Industry Association and Rating Agencies

Steps taken:

• Quality Management Standards (QMS) and Quality Technology tools (QTT): to enhance their competitiveness
• ICT Scheme: for adopting ICT tools and applications through Cloud Computing