The Micro, Small and Medium Enterprises (MSME) sector contributes significantly to the manufacturing output, employment and exports. It is estimated that in terms of value, this sector accounts for about 45 per cent of the manufacturing output and 40 percent of the total exports of the country. As per the quick estimates of 4th All-India Census of MSMEs for reference year 2006-07, the number of enterprises is estimated to be about 26 million and these provide employment to an estimated 60 million persons. The labour to capital ratio and the overall growth in the MSME sector is much higher than in the large industries.  The geographic distribution of the MSMEs is also more even. Thus, MSMEs are important for the national objectives of growth with equity and inclusion.

Considering the importance of the MSME sector in the overall growth of the economy, the Prime Minister announced the setting up of a Task Force on MSMEs in August 2009. Accordingly, a Task Force was set up in September 2010 under the chairmanship of the Principal Secretary to Prime Minister to look into the issues and concerns of the MSME sector in a holistic manner. The Report submitted in January 2010 provides a roadmap for the development and promotion of the MSMEs in the country. It recommends an agenda for immediate action to provide relief and incentives to the MSMEs, accompanied by institutional changes and detailing of programmes to be achieved in a time bound manner. In addition, it suggests setting up of appropriate legal and regulatory structures to create a conducive environment for entrepreneurship and growth of MSMEs in the country. The Task Force has laid emphasis on timely implementation of the recommendations and has set up a system for its continuous monitoring in the Prime Minister’s Office. A Council on MSMEs under the chairmanship of Hon’ble Prime Minister has been constituted to lay down the broad policy guidelines and review development of the MSME sector. The Council would meet on a yearly basis.

As is well known, technology plays a key role in the success of MSMEs. The Task Force in its Report has also stressed on the need for strengthening the technological capabilities of the MSMEs and recommended setting up of a ‘Technology Fund’ for supporting MSMEs to undertake technology upgradation, acquisition, adaptation and innovation to enable them to move up the value chain. Towards this endeavour, the Ministry of MSME has recently launched ten innovative schemes under the National Manufacturing Competitiveness Programme (NMCP) to improve the processes, designs, technology and market access of MSMEs. These include programmes on lean manufacturing, designs, intellectual property rights, quality management standards and quality technology tools, ICT promotion, mini tool rooms, etc. These programmes, which are at their initial stages, are being implemented in a Public-Private-Partnership mode and are expected to provide a cutting edge to the beneficiary MSMEs in the global value chain. The Ministry has also recently enlarged the ambit of Credit Linked Capital Subsidy Scheme for technology upgradation and included 201 new technologies, including 179 technologies relating to Pharmaceutical sector.     

Another aspect that is critical for long-term sustainability of this sector relates to marketing. To facilitate the MSMEs in their marketing endeavour, the various organisations under the Ministry of MSME organize exhibitions/fairs and buyer-seller meets across the country providing an opportunity to them for displaying their products and capabilities. The Ministry is in the process of finalizing a public procurement policy for the MSEs to ensure a fair share of Government procurement. Once formulated, this may be more effective in providing the much-needed marketing support that MSEs seek. In addition, National Small Industries Corporation (NSIC) has launched a B2B Web portal to provide marketing facilities to national and international MSMEs for business to business relationship. Further, NSIC has also established a Marketing Intelligence Cell in May 2010, which shall provide database and information support to the MSMEs on marketing of their products/services. The Ministry of MSME has also launched two schemes under the NMCP to improve the strengths of MSMEs in marketing by using latest techniques and technologies.

The Ministry of Micro, Small and Medium Enterprises is the nodal Ministry of the Government for enterprise development in the country. It is implementing the Prime Minister’s Employment Generation Programme (PMEGP), introduced in 2008-09 by merging the erstwhile Prime Minister’s Rozgar Yojana and Rural Employment Generation Programme, which incentivises the potential entrepreneurs to set up new micro enterprises in the manufacturing as well as the services sector. During the year 2009-10, the scheme helped in setting up of 40,000 new micro enterprises, resulting in generation of employment opportunities for 4.21 lakh persons.

The Ministry has also been conducting various Entrepreneurship and Skill Development Programmes for prospective entrepreneurs through its wide network of field offices across the country to facilitate setting up of MSMEs. These include programmes on Entrepreneurship Development, Entrepreneurship and Skill Development, Management Development and Business Skill Development. The Ministry also extends assistance to three Entrepreneurship and Development Institutes (EDIs), namely, National Institute of Micro, Small and Medium Enterprises, Hyderabad, National Institute of Entrepreneurship and Business Development, NOIDA, and Indian Institute of Entrepreneurship, Guwahati to conduct skill development training programmes on regular basis. During 2009-10, around 3.50 lakh persons were trained through the various schemes of the Ministry. Further, the scheme of ‘Assistance to Training Institutions’ has been expanded by adding a new component to include private participation for substantial increase in the number of trainees. Under the scheme, assistance will be provided to the training institutions/centres established by Partner Institutions (PIs) of National Level EDIs and franchisees of NSIC. The Ministry has also introduced a novel scheme for ‘Support for Entrepreneurial and Managerial Development of Small and Medium Enterprises (SMEs) through Incubators’ from April 2008 for assisting incubation of innovative business ideas that could be commercialized in a short period of time, resulting in the formation of MSMEs. So far, 171 business ideas have been approved under the scheme.

The Ministry also provides handholding support through its Rajiv Gandhi Udyami Mitra Yojana to start-ups. Under the scheme, the potential entrepreneurs is provided support for completion of various formalities and tasks necessary for setting up and operationalisation of the enterprise. Linked to this scheme, the Ministry is launching an “Udyami Helpline” shortly which will provide easy and ready access to information regarding the various MSME-related policies/programmes of the Government as well as Banks. The Helpline will have a single toll-free number across the country, i.e., 1800-180-MSME or 1800-180-6763. The Helpline will have linkages with the all concerned agencies/organisations dealing with the promotion of MSMEs and will facilitate in providing guidance and advice to the MSME entrepreneurs. (PIB Features)

About the author: The author is the Secretary, Ministry of Micro, Small & Medium Enterprises.
DISCLAIMER: The views expressed by the author in this feature are entirely his own and do not necessarily reflect the views of SME Times.