Small Businesses Have To Become Competitive: MSME Minister | SupportBiz


Small Businesses Have To Become Competitive: MSME Minister

Aiming to create a conducive eco-system for the venture capital in the MSME sector, the government proposes to establish a Rs 10,000 crore fund to act as a catalyst to attract private capital by way of providing equity, quasi equity, soft loans and other risk capital for start-up companies.

New Delhi: Government's Make in India programme would be a game changer for the micro, small and medium enterprises if they invest in scaling up businesses to become world-class entities, MSME Minister Kalraj Mishra said on Friday.

He also said that in order to attract investments from private equity players without providing them management control, the small businesses will have to become viable and competitive. "The game changer for the MSMEs is going to be the Make in India initiative. This ambitious programme has potential to attract foreign investment in both production and in venture and angel funds," he said at an All India Management Association (AIMA) event here.

When more Indian and foreign companies produce in India for global markets, MSMEs will be the biggest beneficiaries, he said. "However, to take advantage of those opportunities, Indian MSMEs will have to invest in scaling up and becoming world-class."

The MSMEs are critical to the country's manufacturing sector and foreign trade, Mishra said. The sector accounts for about 45 per cent of the country's manufacturing output and over 40 per cent of exports.

On private equity investments, he said: "The government is considering ways to create a framework for directing private equity towards the small businesses. However, for private equity to give money without sharing management control, the MSMEs have to be viable and competitive without quotas or subsidies."

Mishra added that the outside financing necessarily requires small businesses to have a clear and credible plan to scale up. "Clearly, the MSMEs need to think big and not try to survive on the protection meant to support fledgling businesses."