#2 MSMEs: ENGINES of GROWTH

MSMEs: ENGINES of GROWTH

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MSME is the answer to retaining India as the fastest-growing economy. Only MSME can provide maximum employment, increase per capita income and drive India to be the 3rd largest GDP in the world by 2027.

India has over 6.50 Crore MSMEs of which 98% are micro enterprises. These micro MSMEs employ over 96% human resources of the total MSMEs. The MSME sector contributes 30% of GDP, 45% of exports and 40% of employment in the country. As MSMEs are the growth engines, Governments are committed to providing an ecosystem that nurtures entrepreneurship and empowers MSMEs. Many initiatives have been taken since independence to enhance transparency, digitalization, building industrial zones and liberalizing FDI flows.

The Self Reliant India (SRI) fund scheme was an excellent initiative to address the growth needs of viable MSMEs and underserved MSMEs. Some of the proactive Government policies are:

• Prime Minister’s Employment Generation Programme (PMEGP)
• Credit Guarantee Scheme for Micro and Small Enterprises (CGTMSE)
• Micro and Small Enterprises-Cluster Development Programme (MSE-CDP)
• Scheme of Fund for Regeneration of Traditional Industries (SFURTI)
• A Scheme for Promoting Innovation, Rural Industry & Entrepreneurship (ASPIRE)

In addition, Union and State Governments encourage MSMEs with the following support

• Capital Subsidy on Land, Building and Machinery
• Bank Interest, Electricity tariff and GST reimbursement
• Public procurement

Due to the lack of effective implementation of schemes, there is a wide gap in certain areas in many states. In MSMEs, Women entrepreneurs represent only 20%, moreover majority of them are in the micro sector. Around 5 crore micro-enterprises haven’t availed credit from Banks, not even once. Most of them get credit through private sources at a higher interest rate of 30%. Also, majority of the micro enterprises function with 2 to 3 employees only.

This alerts us to focus on a few other initiatives with effective implementation. A few suggestions are

1. Provide differentiated support for 5 Crore micro-enterprises with a credit facility
2. Promote MSME sector to contribute up to 65% of GDP as in developed countries
3. Cluster development projects for ancillary support
4. Inclusion of all sections in the small and medium sector
5. Better hand-holding support for stressed assets

MSME is the way to build entrepreneurship among the young generation with innovative ideas. Entrepreneurs are the lifeblood of our economy and their success is vital for our nation’s success.