Will the upcoming budget find some place for the SME sector in general and SME exporters in particular?
Madhav Lal: The micro, small and medium enterprises (MSME) sector constitutes an important segment of our national economy. The MSME sector is estimated to provide employment to over 42 million people and is estimated to contribute to about 45% of the total manufactured output and nearly 40% to India's exports. Based on the various representations received from the MSME Associations, this Ministry has been taking up issues critical for enhancing the productivity and exports from this sector with the Ministry of Finance. Pre-budget discussions have also taken place in the Ministry of Finance with various stakeholders, including the representatives of MSMEs.

What has been the impact of the recent relief packages?
Madhav Lal: To deal with the adverse impact of global economic slowdown, the Government has announced stimulus packages. The thrust of these packages have been on fiscal measures designed to stimulate the Indian economy, including the Indian MSME sector. In line with these announcements, the Ministry of MSME has set up a 'MSME Credit Monitoring Cell' to oversee the resolution of credit issues of MSMEs by banks. Further, the Government has issued an advisory to central public sector enterprises and has requested the State Governments to issue a similar advisory to the State Public Sector Enterprises and Electricity Boards to ensure prompt payment of bills of MSMEs. In addition, the Reserve Bank of India and the Public Sector Banks have also taken several measures to pump sufficient liquidity into the banking system and to assist the MSMEs in meeting their immediate needs.

To ensure that large numbers of MSMEs benefit through the various measures announced, the Government is closely monitoring the implementation in consultation with the State/UT Governments. As per reports received, most of the States/UTs are holding regular meetings of the State Level Bankers’ Committee (SLBC)/special SLBC to review the flow of credit to the MSME sector, restructuring of MSME accounts under stress, prompt payments of dues to MSEs by the large units, etc. The review mechanism through SLBC has helped considerably in addressing the liquidity problems faced by the MSME sector.

Should the government introduce some policies (like special quotas) for PSUs in terms of public procurement from SMEs?
Madhav Lal: Section 11 of MSMED Act, 2006 provides that the Government may notify preference policies in respect of procurement of goods and services, produced and provided by micro and small enterprises, by its Ministries or departments, as the case may be, or its aided institutions and public sector enterprises. Ministry of Micro, Small & Medium Enterprises has undertaken an exercise to formulate a Procurement Policy for MSEs in consultation with the Ministries/Departments concerned.

How should SMEs market themselves in a competitive scenario?
Madhav Lal: In the present competitive scenario, two most important elements for marketing of products are quality and cost. Towards this, the Government has introduced several innovative schemes under the National Manufacturing Competitiveness Programme. Some of these include Quality Management Systems and Quality Technology Tools, Programme on Lean Manufacturing, Design Clinics and ICT applications, Technology and Quality Upgradation support to MSMEs, Marketing Assistance for SMEs and Technology Upgradation Activities, etc. The MSMEs should take full advantage of these schemes for improving the quality of their products as well as for reducing their costs. This would enable them to market their products more efficiently in the present competitive environment.

Are SMEs lacking good marketing skills?
Madhav Lal: Given the heterogeneous nature of SME sector, generalizations are avoidable. Marketing is itself connected with so many issues like that of quality, cost, etc. To enhance the marketing skills of MSMEs, the Government is finalizing a scheme on ‘Marketing Assistance for SMEs and Technology Upgradation Activities’. The objective of this scheme is to identify and encourage those clusters of MSMEs, which have quality production and export potential, and assist them to achieve competitiveness in the national and international markets. One of the activities under the scheme includes development of modern marketing techniques for the MSMEs.

There are three main challenges that SMEs are facing. One is the inability to access markets, secondly is the inability to access infrastructure and the third is to influence their external environment. Do you think the government is able to mitigate these challenges?
Madhav Lal: The Government extends support in marketing efforts of MSEs through various innovative schemes as already mentioned. It also provides financial assistance for participation in international fairs/exhibitions, organization of Buyer-Seller Meets/Vendor Development Programmes, etc. Further, the Government is also finalizing a Procurement Policy for MSEs. Similarly, for setting up of industrial estates and to develop infrastructure facilities like power distribution network, water, telecommunication, drainage and pollution control facilities, roads, banks, raw materials, storage and marketing outlets, common service facilities and technological back up services, etc., for MSMEs, the Government is implementing the Integrated Infrastructural Development (IID) Scheme. The scheme covers rural as well as urban areas with a provision of 50 per cent reservation for rural areas and 50 per cent industrial plots are to be reserved for the micro enterprises.

The Scheme also provides for upgradation/strengthening of the infrastructural facilities in the existing industrial estates. The estimated cost (excluding cost of land) to set up an IID Centre is Rs.5 crore. Central Government provides 40 percent in case of general States and upto 80% for North East Region (including Sikkim), J&K, H.P. and Uttarakhand, as grant and remaining amount could be loan from SIDBI/Banks/Financial Institutions or the State Funds. In addition, the Government is also implementing several other schemes like Credit Guarantee Scheme, Credit Linked Capital Subsidy Scheme, Cluster Development Programme, Entrepreneurship and Skill Development Programmes, etc. to mitigate the various challenges faced by them. These measures have helped the MSME sector in registering continuous growth in the number of enterprises, production and employment.

The cheap imports from China has made SMEs jittery? What is your take on this?
Madhav Lal: The Government is closely monitoring the imports from China, particularly in the MSME-intensive sectors. Further, the Government has taken several measures in the recent past to enhance the competitiveness of the MSME sector in India so that they could not only withstand the challenges posed by imports but also enhance their export capabilities. These measures include announcement of a comprehensive package for promotion of micro and small enterprises, package for stepping up credit flow to SMEs, thrust on cluster development and launching of National Manufacturing Competitiveness Programme.   

It has also been observed that the traditional handicrafts items are also being manufactured by China now and sold in India. What kind of initiative the government is taking on this regard?
Madhav Lal: The Government has launched a Scheme titled ‘Scheme of Fund for Regeneration of Traditional Industries (SFURTI)’ in 2005-06 for development of clusters in khadi, village and coir sector with a view to make these industries more productive and competitive and increase the employment opportunities in rural and semi-urban areas. About 118 clusters covering all States have been approved for their development under the scheme. In addition, the traditional handicrafts of the country are also supported through the schemes of the Development Commissioner (Handicrafts) in the Department of Textiles.