Re-vitalizing the MSMEs

Worldwide MSME has been accepted as engines of economic growth, promoting equitable development and inclusiveness in the society. In India, it plays a significant role in industrial development of country. MSMEs employ both the semi-skilled and unskilled workforce and also recognize the customary arts and handicrafts giving enough space to our traditional culture to grow.

Significance and contribution of MSME sector

The sector accommodates more than 80% of total no of industrial enterprises and produce over 8000 value added products. It accounts for more than 45% of total manufacturing output and 40% of total export of the country. It has high employment potential at low capital cost, employing nearly 80% of the unorganized sector. The sector consistently registered a high growth rate as compared to the large corporate sector. Labor intensity and inclusivity is high as it employs majority of women and weaker sections of the society. It is also having the potential to inculcate the tribals of the country by mainstreaming their traditional knowledge and products like local forest produce.

Challenges for MSME Sector

Instead of significant contribution of the sector it remained gripped with many challenges. It includes high borrowing cost, complex tax structure, high transaction cost due to poor infrastructure, inefficient power supply, inverted duty structure due to anomalies in level playing fields, problems of land acquisition, rigid labor laws and because of its unattractiveness skilled work force is not willing to work, influencing the working of the sector in the long-term. The sector suffers from technological obsolescence; products are not competitive globally due to sub-optimal scale of operation, supply chain inefficiencies, fund shortages and poor credit flow. Also due to poor marketing of the MSMEs, the products are not readily sold in domestic Indian market.

Government initiatives and suggestions

GOI took several measures in the past to improve the competitiveness and easy credit flow to the sector but nothing substantive gained in the past decades. However a renewed focus of the government to revamp the sector and the initiative taken are commendable. Some of them include:

KVIC (Khadi Village and Coir industries) reforms, re-vitalising khadi institutions and marketing organisations, raw material procurement, new khadi ventures and synergies with village industries are being attempted. The Scheme of Fund for Regeneration of Traditional Industries (SFURTI) is another major initiative for the development of clusters in Khadi, Village and Coir Sector.

The National Small Industries Corporation Ltd. (NSIC) has been working to promote the industry. Government of India has established Technology Centres (TCs), and enables the access to advanced technologies and provides technical advisory support to the youth at varying levels ranging from School Dropouts to Graduate Engineers.

In order to develop the skilled manpower and developing entrepreneurship Assistance to Training Institutions (ATI) has been announced by the ministry.

Entrepreneurship Development Programmes (EDPs), Management Development Programmes (MDPs), Rajiv Gandhi Udyami Mitra Yojana, National Awards Scheme for MSMEs, Micro and Small Enterprises-Cluster Development Programme (MSE-CDP), Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGMSE), Micro Finance Programme, Trade Related Entrepreneurship Assistance and Development (TREAD) Scheme for Women, Micro, Small & Medium Enterprises (MSME), and Credit Monitoring Cell are such initiatives.

The new government in order to boost the manufacturing growth through the “make in India” campaign could be better addressed by focusing the MSME.

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