20% Quota For MSMEs in PSUs By Next Month: Minister, 20% Quota For MSMEs in PSU, 20% Quota For Micro Small and Medium Enterprises in PSU, 20% Reservation For MSMEs in Public Sector

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Saurabh Gupta | 12 May, 2010
The idea of giving 20 percent reservation to small units in public sector (PSUs) under the procurement policy will come into reality by mid of next month, said Dinsha J. Patel, Minister of State (Independent Charge) for Micro, Small and Medium Enterprises (MSME) in the national capital on Tuesday.

"By and large we have support from all the ministries including the ministries of defence and railways and hopefully we will get the cabinet approval by the mid of June," said the Minister along with Secretary MSME, Dinesh Rai, on the sidelines of a meeting to discuss the recommendations of the Task Force with the State Ministers and Secretaries (Industries/ MSME).

The government is mulling to reserve 20 percent public procurement for micro and small enterprises (MSEs) under the procurement policy.

MSE share of estimated annual procurements, worth over Rs 1,70,000 crore, is now a mere 5 percent, or Rs 8,500 crore. If the government accepts the recommendation, MSEs can have a potential Rs 34,000 crore slice of the overall purchases, including those made by public sector companies.

While answering the reason of delay in the process of public procurement, the minister said, "May be the reason was that the ministries and the departments were busy in Parliament session and I hope that now they will get time to discuss the issues and aspects of the public procurement policy for MSEs."

"I think the Cabinet approval will come by the end of the first fortnight of the next month," Rai added.

Dinsha Patel in his address emphasized, the crucial role played by MSMEs in the economic and social development of the country.

He said, "The MSME sector acts as a breeding ground of entrepreneurship, often driven by individual creativity and innovation. This sector contributes 8 percent of the country’s GDP, 45 percent of the manufactured output and 40 percent of its exports. The MSMEs provide employment to about 60 million persons through 26 million enterprises. The employment potential as well as the overall growth in the MSME sector is much higher than in the large industries".

He further, added that sector has been consistently registering higher growth rates than the overall manufacturing sector, thus demonstrating high degree of resilience and adaptability. The spatial distribution of the MSMEs is also more even. Thus, MSMEs assume great significance for meeting the national objectives of growth with equity and inclusion.