• CALL US : +91-422-4225333
  • WAPP : +91-9952412329

The Southern India Mills’ Association

Committed to Foster the Growth of the Textile Industry

On World MSME Day, what does the sector want from the government?

As countries across the world come together to honour, acknowledge and celebrate World MSME Day, the crucial sector of the economy has its own list of demands that it wants fulfilled.
As the country surges holding the baton of social progress, economic growth and digitisation, the MSME sector which contributes up to 45% of the GDP can no longer be ignored. Earlier this year, Minister of Commerce, Suresh Prabhu had said, “Ideas are born in human minds, and not necessarily in the boardrooms of large corporate,” emphasising how the new industrial policy 2018 will highlight the “M” in SMEs. Prabhu also claimed recently that not only will this new policy, which will be unveiled soon, pay immense attention to MSMEs, but it will also result in manufacturing to make up for $1 trillion of the India’s economy by 2025-2026. However, reeling from the impact of demonetisation and the haphazard implementation of the Goods and Services tax, the MSME sector is looking for succor and have some key demands.
For long, the unavailability of credit for SMEs has been a major stumbling block for small businesses. As the sector is largely informal, banks have hesitated to lend to SMEs for their unreliability to repay loans. With the influx of NFBCs, fintech firms and other alternatives for finances, this problem today has more solutions than it ever did. However, that may still not be the answer. Rajnish Goenka, Chairman, MSME Development Forum says, “NBFCs are gaining popularity in India but they charge 24% interest which is a figure for a small businessman. This year the RBI also said for the first time that SMEs are as relevant as the agriculture sector in the country.” Rajiv Chawla, Chairman, IamSME of India adds, “Out of the 21 public sector undertaking (PSUs), 11 are not funding because of issues related to NPA crises. Sources for credit are an issue that to be immediately addressed.”
The Union Cabinet had claimed earlier this year that the definition of SMEs will be changed. Yet, this decision which was taken in February is yet to be notified. SMEs need to have clarity on their definition and then be marketed well.

The government needs to provide marketing support to MSMEs and also the trading companies to help the SMEs to market their products. While there have been marketing initiatives centered around SMEs, they have failed to live up to the expectation.
For example the scheme for providing financial assistance on marketing support under Marketing Assistance Scheme, provides assistance in organising exhibitions abroad and participation in international exhibitions/trade fairs. It is also meant to co-sponsor exhibitions organized by other organisations/ industry associations/agencies and organizing buyer-seller meets, intensive campaigns and marketing promotion events. There are then schemes like the Marketing Assistance & Technological Upgradation (MATU) that aim to help tap and develop domestic/overseas markets. However, MSMEs argue they would want more from these schemes and in fact many do not know how to avail the benefits.
Beyond marketing, Chawla says there are other schemes that need a serious relook. For example, the lean manufacturing programme. “The scheme was supposed to assist MSMEs in reducing their manufacturing costs, through proper personnel management, better space utilisation, scientific inventory management, improved processed flows, reduced engineering time and so on. This has been stopped for a year now.”