CII recommendations for Accelerated MSME Growth
CII organized an exclusive interactive session with Shri Kalraj Mishra, Hon’ble Minister for MSMEs, Government of India yesterday, 15th September 2015 in Chennai.
Shri Kalraj Mishra, Hon’ble Minister for MSMEs, Government of India during his interaction mentioned about the various initiatives taken by Central Government and also about the progress on the proposed new MSME Policy. He further mentioned that the Ministry of Micro, Small & Medium Enterprises (MSME) are in the process of a web based online registration system of EM (Entrepreneurs' Memorandum) of MSMEs in collaboration with the State Governments. The Minister further informed that the MSME department is planning to formalize the relationship with prominent MSME Associations to be their partners in the growth process of MSMEs in India, as the MSME Associations would play an important role in various aspects of policy making of MSMEs in the days to come.
Shri Kalraj Mishra also shared the intent of the Government of India and the Ministry of MSME to lead Indian MSMEs on a high growth path. After highlighting the role played by MSMEs in the economic landscape of the country, he spoke about the dual role that the Ministry of MSME plays in assisting MSMEs in terms of providing them with a supportive framework through policy advocacy and by bringing about institutional reforms in areas of policy vacuum including taxation reform, regulatory systems’ reforms, finance provisioning reforms, etc. He shed some light on the recent initiatives of the Prime Minister of India, Shri. Narendra Modi, for support to MSMEs. The most significant measures include the Make in India initiative, Skill India for skill development, Digital India for ICT interventions, etc. He illustrated the need for identifying important verticals within this sector with differing interests with regards to government’s policy interventions and highlighted the merits of adopting a focused approach to benefit these verticals.
By welcoming the various initiatives taken by the Ministry of Micro, Small and Medium Enterprises, Government of India, Mr T T Ashok, Chairman, CII National SME Council along with other MSME members presented following set of recommendations during the interaction. CII has put forth various recommendations for the growth and development of SMEs in India and has submitted an Agenda for SME Growth in India to the Ministry of MSME.
- There is an immediate need to revise the MSMED Act, especially the definition of MSMEs which was set way back in 2006 when the Act came into force. As we all know, there has been a huge inflation in these years and there is an urgent need to revise the definition of MSMEs based on the current inflation rates.
- With the enactment of the Public Procurement Policy in 2012, now there is an urgent requirement for a monitoring system which can check the implementation of this policy with the primary objective to safeguard the interests of the SMEs. Similarly, there is also a need for State Specific Public Procurement Policy which would help the SMEs across India since there are a large number of State owned PSU’s with whom SMEs can do very good business.
- SMEs suffer the high cost of credit which does not reach them in time. The SMEs need financing for operations & working capital (mainly manpower & electricity costs); modernization / up gradation of technology; marketing and capacity expansion. There is an inadequate capital infusion compounded by insufficient data on credit requirement.
- Monitoring mechanism should be put in place to ensure adherence of various policy guidelines issued and schemes announced by the RBI for the benefit of SMEs. Availability of higher amounts of loan without insistence on collaterals and third party guarantees must be ensured. CII recommends the extension of NPA from 90 days to 120 days with an additional 30 days as grace period for the SME sector. This would help SMEs from not becoming NPA’s to a certain extent. Also appreciated the MUDRA initiative.
- Enabling Equity participation for MSME.
- Additional budget needs to be provided to Cluster Development Programme implemented by the Ministry of MSME. The CFCs would perform the functions of tooling and technology development and thus complement the ongoing initiative of Ministry of MSME to set up 15 new Tool Rooms in the country whilst up grading 18 existing ones.
- In order to promote the exports from the MSME sector in India there is a need for Simplification in export related procedures and ease of documentation, E-enabling system for export and Continuity of the Foreign Trade Policy would help in boosting exports from the MSME sector in the days to come.
- There is an urgent need to look at simplifying the Compliance and the Inspection policy under the Labour Act governing the MSMEs which will help a long way in simplifying the procedures which the MSMEs need to follow.
- Development of Infrastructure facilities for the MSME sector is vital for scripting the growth story of the Indian MSME Sector. CII recommends 25% allotment of land in the present and upcoming Industrial corridors, estates and parks promoted by Government of India.This would help the Indian MSMEs access Global infrastructural facilities like access to R&D centers, logistics hub, business centers etc.
- 25% of fund allocations need be reserved for women entrepreneurs to fill the gender gap in the industry.
- Mr T T Ashok, Chairman, CII National SME Council thanked the Minister for having inaugurated the CII online Finance Facilitation Centre which provides advisory and credit facilitation support to SMEs and also for the Central Government’s new initiative ‘Udyog Aadhar’.
16 September 2015