Schemes MSMEs should watch out for in 2013 | SupportBiz

Policy Notes

Schemes MSMEs should watch out for in 2013

The government of India has accepted that MSMEs are growth engines, and has also acknowledged the growth challenges that these firms face. The government has rolled out several schemes to help MSMEs tackle these challenges. Of these, the MSME Cluster Development Scheme and Technology Upgradation Scheme are expected to be action-packed this year.

MSME Cluster Development Scheme:

The cluster development approach has been adopted by the Ministry of MSME, Government of India, as a strategy for enhancing the competitiveness and productivity of Indian MSMEs. Capacity building of micro and small enterprises (MSEs) is also one of the main objectives of this scheme.

In 2013, there are expectations of this scheme witnessing great action.

R Narayanan, Head of Avantha Centre of Competitiveness for SMEs, CII, says, “With regards to manufacturing SMEs, it is highly expected that they will focus on processes and seek expertise guidance in several business-sensitive areas. The cluster approach has been very efficiently working for the past 15 years in bringing such expertise closer to the SMEs. Now, I can foresee some great action on this front, as the Ministry of MSME is aggressively working on the development of SME clusters.”

The cluster approach becomes more important for SMEs which need to be well-equipped to deliver the best possible output.

Narayanan also added, “We, at CII, understand the potential of SMEs. We also understand that the cluster-based approach can contribute significantly to SMEs. So far, we have covered 226 clusters across India. The cluster approach by CII is a time-bound initiative, in which the cluster activity runs for 12 to 24 months.”

Clustering of units also enables various service providers, including banks and credit agencies, to provide their services more economically, thus reducing costs and improving the availability of services for these enterprises.

The major aim of this scheme is to support the sustainability and growth of MSEs by addressing common issues such as improvement in technology, skills and quality, market access and access to capital, among other things. The scheme will also help MSEs build capacity for common supportive action through the formation of self-help groups, consortia and upgradation of associations. The scheme will also enable the development of common facility centres for testing, training centres, raw material depots, effluent treatment plants and better usage of complementary production processes.

Technology Upgradation Scheme:

Although the significance of advanced technology infrastructure is well understood by Indian MSMEs, it is a fact that many of these firms lack in accessing technology due to poor consultancy support or information services. The sector is struggling due to the non-availability of skilled manpower and, more importantly, entrepreneurs themselves have low awareness about how to source innovative technologies for production. Moreover, there is a general belief that the cost of production gets influenced by the use of innovative technologies.

The role of the government is very important in this scenario. The Technology Upgradation Scheme is a great initiative by the government of India, working towards creating an effective ecosystem for the growth of MSMEs in the country. In the year 2013, the Technology Upgradation Scheme is going to be a great action area for Indian MSMEs.

“The government is working towards bringing down barriers of growth, but spoon-feeding should not be expected from it. Entrepreneurs from the MSME segment should do their part of work, and the government will ensure that it enables them with policies which protect their interests.  There must be joint efforts at addressing the problems of technology and access to finance,” stated CK Mishra, Joint Secretary - SME, Ministry of MSME, Government of India.

For technology upgradation, the Development Commissioner (DC), MSME, provides capital subsidy and other assistance to strengthen MSEs. The schemes covered under technology upgradation and productivity enhancement also help MSEs face the challenges of liberalization and globalization.