Speedy reforms, Implementation key for MSMEs revival - CII

Speedy reforms, Implementation key for MSMEs revival – CII

19 June 2013, Chandigarh

"Speedy reforms and policy measures need to be adopted and implemented both at central and state level to revive the Micro, Small & Medium Enterprises (MSME) sector which is facing severe slowdown. The sector which provides employment to over 8 Crore persons in India, contributes 8 per cent of the country's GDP, 45 per cent of its manufactured output and 36 per cent of its exports needs immediate attention", emphasised Mr Raman Saluja, Chairman, Confederation of Indian Industry (CII), NR Committee on MSMEs & MD, Oriental Engg Works P Ltd during a Press Conference at CII's NR Headquarters, here today.

"In north, 71.15 lac MSME enterprises (27.3% of India's total MSMEs) provide employment to approximately 1.53 crore people i.e. 25.8% of national MSMEs, hence it really needs favourable policies in current scenario", he emphasised. 

He strongly called for a collaborative effort on the part of centre and state governments and agencies, banks and Financial Institutions to ensure that the schemes like cheaper credit, easy lending, collateral free loans and various other exemptions etc laid down for the benefit of MSMEs are implemented in true spirit. "Another area of concern is the lack of awareness amongst the MSMEs about these schemes. To address this issue and to increase awareness about various government schemes, CII would hold Informative Roadshows in association with the Ministry of MSMEs, Financial Institutions (FIs), Finance Ministry and banks all across north to share the schemes in details so that MSMEs can take benefit", he informed.

CII is handholding MSMEs and providing them expert advice and guidance on aspects like finance, credit, taxation, government schemes and marketing support through its dedicated MSME Help Desks across various states. We are launching a dedicated regional CII MSME Helpdesk, comprising a team of professionals at CII Chandigarh headquarters in near future as well.

"To ensure better and cheaper flow of credit to MSMEs, the Government is implementing the "Credit Guarantee Scheme" which is a welcome move but the limit should be raised from 1 crore to 5 crore, considering the present scenario. More such schemes should be initiated to provide MSMEs with easy and cheap access to credit. CII has also been advocating for interest subvention of 2% to the MSME sector taking into account its overall contribution to the national economy as is given to the Agriculture Sector. The smaller units between 10 – 50 crore Turnover should also get these benefits. Similarly, we also need to look at alternate financial schemes like Private Equity, Venture Capitalists, Angel Funds etc to fill the deficit of US $ 29 billion of credit needed by the MSMEs", he added.

"There is a dire need to revisit the MSMEs definition, considering the high costs of Plant & Machinery. Separate labour laws are also needed for MSMEs to encourage them to grow. We are taking up these issues regularly at the various Ministry levels and in the Inter Ministerial Group on MSMEs, of which CII is a member", he shared. 

He lamented that most of the government's projects have not been initiated on ground and called for their immediate initiation with PPP mode.

Welcoming the Public Procurement Policy, he said "Announcement of the Public Procurement Policy, wherein all Government Departments and Public Sector Undertakings shall procure minimum of 20% of their annual value of goods from MSMEs is an excellent move. However, the ruling as per the notification is not being adhered to at certain levels. CII would continually take it up with the concerned ministry and state governments. Further, It should be made mandatory for the large scale industry to disclose their share of procurement from MSMEs on their websites".

Calling the SME exchange a revolutionary move, he said, "Introduction of dedicated SME exchanges is yet another innovative step in direction of strengthening the credit flow to the MSME sector; however there is a need to reduce the threshold limit significantly.

Sharing CII's unique upcoming initiative to be launched on 4 July 2013 - Golden Top 100 Companies (GTC) for MSMEs, he highlighted that CII -Avantha Centre of Competitiveness would holistically handhold and guide selected 400 MSMEs to grow 3-5 times bigger in 4 years. CII would help them both in operations as well as marketing to increase efficiency in production, reduce costs as well increase the top-line and the bottom-line. Applications would be invited from CII MSME members and selection would be done on the basis of a small initial audit. Initially 25 companies from the Northern Region would be selected as pilot project.

Talking about the structural development of the sector, Mr Pikender Pal Singh, Regional Director, CII NR mentioned that "CII is working to continuously enhance competitiveness of the MSMEs by way of 'best practices sharing' sessions, plant visits, Energy and cost audits etc. CII is also actively engaged with the central and state governments like amendment of the MSME Act, 2006 for investment thresholds for MSME sector by linking it to Wholesale Price Index to encourage the investment in Plant & Machinery.  If the amendment is implemented, the new thresholds for investment in plant and machinery will go to INR 3.5 million (from 2.5 million) for Micro, INR 70 million (from 50 million) for Small and INR 140 million (from 100 million) for Medium enterprises.