‘Need To Incentivize Entry, Growth And Exit From MSME Sector’ | SupportBiz


‘Need To Incentivize Entry, Growth And Exit From MSME Sector’

"There is a need to create an ecosystem where entry, growth and exit from the MSME sector are incentivized," said Shankar, at the 'MSME Summit 2014' organized by FICCI-CMSME on the theme 'MSME Prosperity - Reinvigorate the MSME Ecosystem', in New Delhi.

There is a need to incentivize entry, growth and exit of Micro, Small and Medium Enterprises (MSME) to witness an unprecedented growth of the sector, said Ajay Shankar, Member Secretary, National Manufacturing Competitiveness Council.

In his Special Address, Shankar said that Indian industrial sector does not look at labour or workers as an asset and partners in growth. This has emerged as the biggest weakness of the Indian industry. Technology and machines across the world are similar, the real success and competitiveness are achieved by the skill and quality of a worker. Hence, it is imperative to increase the productivity of Indian workers and improve their quality of work, he added.

Speaking about the need to create young entrepreneurs, Shankar said, "We are yet to create an ecosystem where a college graduate starts an MSME. If we are able to achieve this in the next five to 10 years, then MSME sector can witness unprecedented growth."

The government's move to amend Factories Act, labour law reforms and encouragement to e-governance are some of the initiatives, which will go a long way in boosting the MSME sector, said Shankar.

Madhav Lal, Secretary, Ministry of Micro, Small and Medium Enterprises (MSME), said, "A large chunk of MSME sector is unregistered and remains segregated. This makes it difficult for the government to frame meaningful policies to cater to this sector with diverse verticals."

He said that MSMEs across the nation also face lack of information and awareness about the schemes and policies available to them.

"There are many government schemes available to MSMEs such as Cluster Development Programme and National Manufacturing Competitiveness Programme but MSMEs are unaware and are not able to avail the facilities provided by these. Hence, awareness campaigns are needed to help MSMEs to adopt such programmes to enhance their growth."

Referring to the Prime Minister, Mr. Narendra Modi's call to overseas investors on Independence Day to 'Make in India', Lal said a positive response to this idea could make India a global manufacturing hub.

On the occasion three publications were released titled 'MSME Definition in India: The Present State and the Imperatives'; Nurturing Entrepreneurship in India' and 'New Age Technologies for Business Development and Ease'.

Sidharth Birla, President, FICCI, said, "MSMEs face immense challenges and we need to work closely with the government to overcome these. The Union Budget has specified some concrete steps to promote development of the MSME sector. We welcome the announcement of revision of existing definition of MSMEs and hope this will give an impetus to 'growth' of MSMEs. The industry requires the ceiling to be raised to spur greater capital investment, while keeping eligibility for government incentives intact. The summit will also discuss viable options on the definition of MSMEs and we will submit our recommendations to the Ministry shortly."

"We are keen to align our MSMEs within global value chains. This implies that our MSMEs have to become more competitive and reduce transaction costs at all levels. While MSMEs have the potential to innovate and adapt to market challenges, the weak link in the MSME ecosystem is inefficient backward and forward integration. We need a comprehensive framework to service MSMEs through cluster development, technology platforms and single-window clearances. Government has implemented several schemes at the center and state levels from Credit Guarantee Scheme to Manufacturing Competitiveness programme; however the uptake of these schemes has been limited. FICCI CMSME is happy to work with the Government to facilitate greater utilization of these schemes," he added.

Birla said that with e-commerce changing the way companies engage, both B2B as well as B2C, there is a new opportunity for MSMEs to utilize digital platforms. In the recent budget, Rs.100 crore has been allocated to development of Technology Development Fund scheme. "We look forward to becoming a part of the consultative mechanism with the Ministry to strengthen technology adoption by MSMEs," he added.

Sanjay Bhatia, President, FICCI-CMSME and Managing Director, Hindustan Tin Works Limited, said, "FICCI-CMSME recognizes the strengths of Indian MSME sector and hence is keen to facilitate active dialogue between industry players, government and other relevant stakeholders to create conducive environment for the growth of this important segment of economy. This year's Union Budget has announced specific steps that provide a positive direction to the MSME sector for growth. We feel that from industry side industry chamber like ours can collaborate efficiently and complement with Government's efforts towards development of Indian MSMEs."

He said that the importance of MSME sector development as a driver of growth is based on a conceptual framework linking entrepreneurship and economic growth with major development objectives such as job creation.

"The framework implies a relationship between business and government, in which development is realized through entrepreneurship and investment, on the side of business, and an enabling policy environment and friendly investment climate, on the part of Government. MSMEs should strive to grow and come out from the dependence on subsidies as MSME prosperity lines in growing vertically but not horizontally."

"However, every enterprise needs support be it MSME or large enterprise. At the startup stage and at a certain level, there is a requirement of financial support in terms of subsidy from the Government but beyond that we urge that policies should be devised which incentivize and encourage growth," he added.