Streamline MSME Policies

It has been a year over since the recommendation of the Advisory Committee on the reservation had cleaned up the lingering vestiges of the earlier reservation policy by de-reserving the last twenty odd items purported for exclusive manufacture in Micro, Small, and Medium Enterprises (MSME).

It is now in the midst of preparing a national policy for MSME to swim against competition in the absence of ballast of patent support like reservation. A one-man Committee under the chairmanship of the former Cabinet Secretary and former Governor, Jharkhand, Prabhat Kumar has been constituted to make appropriate recommendations for such a pan-India MSME policy.

 Secretary, MSME, Government of India, K.K. Jalan told this correspondent that the Committee is most likely to submit its report by June 30, 2016, as it has already held detailed deliberations to come out with a concrete plan of action to give an impetus to this indispensable segment of the national economy.

With registered 3.6 crore units spread across the country employing more than 80 million people, MSMEs today contribute to 37.5 percent to the country’s gross domestic product (GDP). As per latest estimates available up to 2013-14, the employment opportunities fostered by MSMEs was of the order of 111.4 million. On the basis of data on GDP published by the Central Statistical Office (CSO) and final results of the latest MSME Census (Fourth Census) conducted (with base reference year 2006-07), wherein the data was gleaned till 2009 and results published in 2011-12, the estimated contribution of MSME manufacturing sector to GDP during 2013-14 was 7.04 percent. 

What lends gravitas to the MSME’s contribution to GDP is the contribution of MSME services sector, which is estimated at 30.50 percent during 2012-13, the aggregate share of  MSME sector in GDP during 2012-13, the final year of the decade-long erstwhile UPA government, is 37.54. Shorn of the contribution of services MSME, the manufacturing MSME contribution remains low and slow of barely less than 10 percent in overall GDP.

Considering the importance with which the Modi Government began its innings after May 2014 unfurling a host of schemes such as Make in India, Start up India, Stand up India, Zero effect and Zero defect to give an impetus to manufacturing in the overall scheme of things for pushing the country’s growth a tad higher, expectations naturally run high for MSMEs to benefit by these schemes announced with much panache.  But the reality on the ground punctured all plain expectations with manufacturing growth remaining on a morose mode, nowhere near the bruited 8 percent industrial growth rate the country had chalked out decades ago and which it had compassed in the 1990s!

It would be interesting to know that the Ministry of MSME has its plates overflowing in running a raft of schemes for the benefit of the MSMEs, convinced as it is, of the sector’s immeasurable potential to help address structural problems like unemployment, regional imbalances, unequal distribution of national income and wealth across the nation. The spate of schemes include, among others, the Prime Minister’s Employment Generation Programme (PMEGP), Credit Guarantee Trust Fund for Micro and Small Enterprises (CGTMSE), Credit Linked Capital Subsidy Scheme (CLCSS) for technology up gradation, Scheme of Fund for Regeneration of Traditional Industries (SFURTI) and Micro and Small Enterprises- Cluster Development Programme (MSE-CDP) for the establishment of new enterprises and development of extant ones.

Other equally weighty schemes include, Udyog Aadhaar Memorandum (UAM), Public Procurement Policy, Framework for Revival and Rehabilitation of MSMEs, Tool Rooms & Technology Centres for MSMEs and a Scheme for Promotion of Innovation, Rural Industry and Entrepreneurship (ASPIRE). UAM was notified in September 2015 under section 8 of the MSME Development Act, 2006.

 A pioneering scheme to promote ease-of-doing-business for MSMEs in the country, UAM ushers a modern era trade facilitation, replacing the irksome filing of Entrepreneurs’ Memorandum (EM part I & II) with the   respective States/Union Territories. All that an MSME entrepreneur is required to do is just to file online, a simple single page UAM on the relevant website to get an instant unique Udyog Aadhaar Number (UAN). In less than a short span of six months, more than 3.12 lakh UAMs have been filed as the information sought is on self-certification basis sans supporting documents at the time of online filing.

Similarly under a framework for revival and rehabilitation of MSMEs, notified in May 2015 under section 9 of the Micro, Small and Medium Enterprises Development Act, 2006, identification of incipient stress/ sickness is now on a fast track with all the banks being directed to set up a Committee for Distressed MSME enterprises at zonal or district level with the Committee putting up a Corrective Action Plan for the MSME unit that approaches it for salvage.  Under Tool Rooms & Technology Centres for MSMEs, these Centres have assisted 32,349 MSMEs for catering to MSMEs’ need for skilled manpower, precision and highly sophisticated components, tools and dies.

 According to the Union Minister, MSME, Kalraj Mishra, the Ministry is currently working on setting up of 15 new Technology Centres at Rs 2200 crore with the assistance of the World Bank, even as the extant tool rooms would make around two lakh youth employed every year with due training and skilling.   Again, under SFURTI, the objective of organising the traditional industries and artisans into clusters to make them competitive and lend support for their long-term sustainability by way of enhancing the marketability of products, improving the skills of artisans and making provision for common facilities is unexceptionable.  Besides these development-focused schemes for MSMEs,  the biggest relief to units working in the sector came from the Union Budget 2016-17 when an increase in turnover limit under presumptive taxation scheme (Sec 44AD of the Income Tax) from existing one crore of rupees to Rs 2 crore was announced.

All these no doubt testify to the seriousness with which the NDA government is determined to accord the requisite thrust for this crucial sector that holds the golden key to offer countless employment opportunities to skilled, semi-skilled and unskilled population.  But the grim reality as conceded by no less a  body than the Ministry of MSME  itself  before the House Panel recently that it has not done any survey to ascertain whether its schemes are reaching to the unorganised and unregistered sector at a time when a minuscule minority of MSMEs only are registered. As a new national policy of MSME is under way, the Committee should go into the indispensable issue of integrating the bewilderingly plethora of promotional schemes to unify them in a consolidated form and format to make the sector viable and vibrant. Even as the MSMED Act 2006 does not enjoin the micro enterprises to get registered for deriving potential benefits, this loophole should not let them get further marginalised from the mainstream!