How govt is strengthening MSME sector to make India USD 5 trillion economy
The government has launched the Champion portal which will provide all solutions at one place, and we will further promote the portal to make MSMEs more competitive.
Micro, small and medium enterprises are among the most important pillars of India's economy and the government is working to make the sector stronger and more developed, Minister of State for MSME Bhanu Pratap Singh Verma recently said.
Addressing FICCI's Annual MSME Summit, the minister urged the industry and other stakeholders to work with the government to make India a USD 5 trillion economy along with becoming self-reliant.
He said there are 6.3 crore Micro, Small and Medium Enterprises (MSMEs) in the country which are providing 11 crore jobs.
Ridhima Kansal, Director, Rosemoore, said, "MSME plays a critical role across numerous segments such as retail, technology, fashion & apparel, food, agribusiness, interiors & home décor, tourism, and much more. The segment has shown tremendous resilience in the face of the recent pandemic and has been instrumental in expediting the process of economic recovery."
"However, despite being an instrumental cog in the wheels of economic growth and nation-building, the interest of MSMEs has largely been ignored in the country. The segments suffer from institutional support to innovate which affects their overall productivity. Likewise, there is a limited impetus to upgrade and upskill, which further affects business growth," she added.
MSMEs contribute around 30 per cent to our GDP and have a share of 50 per cent of the income generated from total exports.
Challenges ahead for MSME sector
Ridhima Kansal opined that the biggest challenge is the lack of credit funding. Only 16% of the MSMEs get access to credit support and they have to mostly rely on personal resources and soft funding from friends and families. Hence, it is important for the government in India to take concentrated steps to support the Indian MSME sector through prudent credit policies. In this direction, governing agencies, financial institutions and banking enterprises will have to work together to help MSMEs with their credit and working capital requirements.
Likewise, the government in partnership with accelerator programs and educational institutes should work toward providing MSMEs with better training on modern marketing and technology support. This will also help in their value chain optimization and enhancement of efficiency.
Expectations ahead of Budget 2023-24
Kumar Saurav, Global Mobile Business Head, AdCounty Media Pvt. Ltd, said, "The primary expectation of the MSME Budget of 2023-24 is to get enhanced access to working capital. However, the Indian government is already looking forward to initiatives like restructuring the Credit Guarantee Scheme and full-fledged integration of Udyam, e-Shram, and National Career Service and ASEEM portals. It has also extended the non-tax benefits for MSMEs for up to 3 years. Alongside this, education in leveraging marketing and technology is pivotal for the growth of MSMEs and indispensable to making India self-reliant."
He further noted that the MSMEs are not only the highest job creators but also the highest taxpayers in the country. However, these small companies, which operate with the sentiment of survival, often face hardships when their working capital becomes stifled due to delayed payments and obstacles in the supply chain.
Accelerating the flow of credit to small enterprises is essential for India to achieve its $5 trillion economy dream by 2025 as the MSME sector has been a significant driver in the country’s rise as the world’s fifth largest economy, suggests KPMG November 2022 report on non-banking financial companies (NBFCs) and housing finance companies (HFCs). The report also noted that although the economic losses to the MSME sector from the Covid pandemic were huge, it has been recovering well on the back of solid policy initiatives from the government. The MSME loan market has risen from Rs 31 lakh crore in March 2020 to Rs 36.4 lakh crore as of June 2022, with 88 per cent of registered borrowers hailing from the micro-segment, 10 per cent from the small segment, and only 2 per cent from the medium segment, the report showed.
How govt is strengthening the sector
The government is taking continuous steps to strengthen Indian MSMEs and PMEGP (Prime Minister's Employment Generation Programme), launched last financial year. Under this scheme in the year 2021-22, a total of 1.03 lakh new units have been set up in the manufacturing and services sector.
The government is working to ensure that by taking advantage of the full potential of the MSMEs, their contribution to the Indian economy should be doubled.
The MSME ministry is setting up various technology centres across the country to support and strengthen the existing and new MSMEs.
Apart from this, the government is also working with other organisations to help the MSMEs under the 'ZED' certification scheme (providing technology upgradation and quality certification), ASPIRE scheme to promote quality and innovation, Design Clinic, etc.
The government has also launched the Champion portal which will provide all solutions at one place, and we will further promote the portal to make MSMEs more competitive.
The government is also working with the state governments to formulate a coordinated response to the issues faced by the MSMEs, under the 'Raising and Accelerating MSME Performance' (RAMP). Self Reliant India Fund, launched in 2020, has provided growth capital worth Rs 2,335 crore to 125 micro, small and medium enterprises till date.
Other keen awaited initiatives include setting up of technology centres, management information system, formulation of national MSME Policy, addressing quality issues through ZED certification and payment issues of MSMEs. The government has extended non-tax benefits for 3 years in case of an upgradation in the classification of MSME.
Also Read | Earn over 9% interest on THESE FDs, Higher than PPF, Kisan Vikas Patra, Sukanya Samriddhi schemes! ! FD interest rate hike | Check latest interest rate of banks, savings account
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.