Finding growth for Maha’ MSMEs

Sairaj Iyer

Positive growth of SMEs shall bring about a positive impact on the country’s economy. However, motivating SMEs to grow is easier said than done. SME-friendly policies, the key motivator, have been in the making for some time, but information pertaining to such policies have failed to percolate down the ground. The Indian Merchants Chamber organized a seminar to educate such MSME-friendly policies, on 31st August at Mumbai. 

Deepak Premnarayen, President at IMC delivered the introductory address at the seminar, while pointing out that gaining access to market, technology and finance were some of the key challenge areas for MSMEs. According to him, credit growth reached 10% in the last 2 years although GDP grew at 7.5%, while there has been a decline of 3.8% and 9.8% in micro-manufacturing and MSME sectors respectively. “The Ministry of MSME is implementing various schemes and programs for promotion and development of MSME sector. The Centre will unveil a New National Policy for Micro, Small and Medium Enterprises (MSME) in October. A detailed policy will be projected for the sector which is expected to contribute nearly 7.8% to the GDP, 50% to the manufacturing sector and 42% to exports,” he averred. 

While the SME sector may have slowed down, there have been a slew of policies that could inspire the sector. RB Gupte, Director, Ministry of MSME pointed out that the government has brought out a series of initiatives to bring about a level-playing field for the sector. According to him, the Centre’s initiatives such as Udyog Aadhar, MSME Databank, MyMSME app, ZED Maturity Model, national SC & ST hub and a facility for easy financing and banking for MSMEs have great potential to bring positive growth in numbers. He also pointed that all PSUs have to procure 20% from the MSME sector of which 4% has been reserved for SC/ST entrepreneurs. “The ministry has achieved 12% of this target,” he said. 

Gupte also explained the rehabilitation framework for MSMEs in the event they are not able to pay loans. The program looks at avoiding instances where MSME accounts are being written-off as NPAs. He said, “The branch manager will identify such accounts, and a special committee will be notified and the recommendations of this committee will help take early action to ensure that the account does not fall under NPA”. 

The panel of experts agreed that time would not be far when SMEs can visualize of a single-digit interest rate regime. Dr. Kshatrapati Shivaji, Chairman & Managing Director – SIDBI, which handles 97% of venture capital funds in India, explained that only 10% MSME sector is contributing to the GDP of 7.5%. “When this number doubles, our GDP will also double,” he said while reaping optimism on TREDS (Trade Receivable Electronic and Discounting System), a program that would help SMEs get instant credit and cultivate a fiscal discipline. 

Subhash Desai, the industries minister of Maharashtra explained that of the 2600 MoUs signed during the Make-in-India week in Mumbai during February, 2400 were from SMEs. The government besides working on these requests has also reserved 20% industrial land for MSMEs, and contributed 75 crore to SIDBI for an MSME fund. “We have brought 18 different departments on one platform, using the Maitri platform.  Requisite permissions have been brought down to 37. I want to bring it down to 25. Minimum clearances, permits, NOCs, are needed for industry units,” he concluded.