Government accords high priority to MSME says Mr. Dinesh Rai Secretary, Ministry of Micro, Small & Medium Enterprises, GOI

Saturday July 11, 2009,

5 min Read

The MSME Sector constitutes an important segment of our national economy and has shown continued dynamism in terms of growth, the number of enterprises, their production, employment generation and their contribution to the country’s manufacturing output and exports is immense said Mr. Dinesh Rai, Secretary, Ministry of Micro, Small & Medium Enterprises, Government of India while address an Interactive Meeting organized by the All India Association of Industries (AIAI) and World Trade Centre.

MSME sector provides employment to over 42 million people and contributes to about 45% of the total manufactured output and nearly 40% to India’s exports, Further, the sector has been consistently registering higher growth rates than the overall manufacturing sector, thus demonstrating the high degree of resilience adaptability stated Mr. Rai. In view of sector’s significant contribution in promoting balanced and equitable growth all over the country, several initiatives have been taken for the promotion and development of the sector, he added.

Mr. Rai, further stated that the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, which has come into force with effect from 2nd October 2006, has broadened the definition as well as coverage of the micro and small enterprises sector. The broadened coverage of the sector now also includes the service enterprises that are making significant contribution to the growth of the national economy and exports. The Act has also defined for the first time the medium enterprises.

Mr. Rai, however agreed that an area, that needs special mention is access to affordable and timely credit by the MSME sector. Availability of adequate credit is paramount to the success of the MSMEs. Keeping this imperative need, the Government had announced a ‘Policy Package for Stepping up Credit to Small and Medium Enterprises (SMEs), with the objective of doubling the flow of credit to this sector within a period of five years. Further, the Ministry is also implementing two major credit-related schemes, namely, Credit Linked Capital Subsidy Scheme and Credit Guarantee Scheme to assist the sector in meeting its financial requirements.

Mr. Rai, further said that, I am happy to inform that more than 1.14 lakh proposals have been approved under the Credit Guarantee Scheme. In the Union Budget 2008-09, the Government has also announced setting up of a Risk Capital Fund of Rs. 2,000 crore with Small Industries Development Bank of India to facilitate flow of enhanced equity support and venture capital to MSMEs. Further, a proposal to set up a trading exchange exclusively for MSMEs is also under active consideration of Securities and Exchange Board of India and I would urge MSMEs to take full advantage of these initiatives.

National Manufacturing Competitiveness Programme (NMCP), the nodal programme of the Government of India to develop global competitiveness among Indian MSMEs. Being implemented by our Ministry , the Programme envisages investment of nearly Rs. 1000 crore during the 11th Plan period by the Government towards enhancing the entire value chain of the MSME sector said Mr. Rai.

Mr. Rai added that Mini Tool Room Scheme which will invite competitive bidding from entrepreneurs and Associations to set up Tool Rooms with Government support upto Rs. 9 crore.

Mrs. Malini V. Shankar, Development Commissioner, Government of Maharashtra said that the State Government has DICs who work only for small scale sector and its growth. The State Government is emphasizing on thrust areas to support and minimize formalities to reduce transaction cost for the SME sector. The State Government has one time settlement policy and felt that the Government needs to formulate an Exit Policy and streamline labour laws. Mrs. Shankar added that although there are various schemes for SMEs there is scarcity of land hence the 20% land which is locked up by sick units in Mumbai-Pune region could be utilized for new industries if the matter could be resolved.

Mr. Vijay G. Kalantri, President, All India Association of Industries in his welcome address said that various issues confronting the growth of small scale industry which has performed better than other sectors is under the grip of multiplicity of permissions, rules and regulations, paucity of funds and inspectors coming in way of marketing and productivity,  lack of infrastructural facilities are some of the impediments hampering the growth of small scale sector in India .

Mr. Kalantri further added that the small scale sector is not represented on any fora which needs to be looked into in view of its role towards employment generation and exports. World over the small scale sector gets preferential treatment but in India there is lack of support from the Bankers as well as Government.

He stressed on the need to look into policy decision to ensure adequate finance to the SMEs. The Banks needs to have experts from Industries to review and analyze sickness in the small scale sector and to rehabilitate the sick industries in its initial stage. The delayed payment Act needs to be enforced strictly and Rs. 10,000 crore Equity fund announced specially for the SMEs has not seen the light of the day.

Mrs. Rupa Naik, Executive Director, All India Association of Industries (AIAI) proposed the vote of thanks.

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