MSME : Drivers of Growth
The positive initiatives of present government are certainly helping MSME to play a pivotal role in the growth story, still the sentiments of their representatives suggest that there are lot many things to be done to realise the Make in India dream
On the one hand when high profile investments and multi-million dollars investment is getting traction under ‘Make in India’ programme, the critical sector of Micro, Small and Medium Enterprises (MSMEs) is turning out to be the real drivers of growth. Under the looming global economic circumstances also, this sector rooted in the ethos of Bharat has resiliently registered an annual growth rate of over 10 per cent for the last few years. The MSME sector contributes around 8 per cent to the GDP, 40 per cent of the total exports and 45 per cent of the manufacturing output, which makes the MSME sector an important element in the socio-economic development of the country. The total number of 361.76 lakh enterprises in the MSME sector include 15.64 lakh are registered enterprises, as per the Fourth All India Census of the Micro, Small and Medium Enterprises. It has also been recorded that the sector offers employment to 805.24 lakh people. With 38 per cent contribution to the nation’s GDP and 40 per cent and 45 per cent share of the overall exports and manufacturing output, respectively, it is easy to comprehend the salience of the role they play in social and economic restructuring of Bharat. Besides the wide range of services provided by the sector, the sector is engaged in the manufacturing of over 6,000 products ranging from traditional to hi-tech items.
The proposed first MSME technology centre in Bhiwadi in Rajasthan and revitalisation of Micro, Small & Medium Enterprises Development Institute (MSMEDI) in every State are important institutional initiatives for reshaping the sector. Automobiles, general engineering, tool making, metal cutting, computer aided cutting, designing and manufacturing, industrial process automation, food processing, solar energy etc are the sectors that are seeing positive changes through these programmes. Besides this MSMEs lay a crucial role in defence and space technology. MSME Tool Rooms have been credited to provide at least ten components that were used in India’s Mangalyaan (Mars Orbiter Mission probe), the Indian Space Research Organization’s (ISRO) most ambitious mission till date, which is the country’s first inter-planetary space mission. The sector has also contributed vital inputs for other space satellites such as the Chandrayan. This suggests the diversity of MSME sector in India in terms of its size, level of technology employed, range of products and services provided and target markets. The positive initiatives of present government are certainly helping them to play a pivotal role in the growth story, still the sentiments of MSME representatives suggest that there are lot many things to be done to realise the Make in India dream.
NSIC’s Rapid Incubation Programme
National Small Industries Corporation (NSIC) has devised an innovative process that envisages rapid incubation for small enterprise establishment in just three months, whereby an unemployed youth is incubated and transformed into a budding entrepreneur. This process can incubate any person between 18-60 years of age.
India Aspiration Fund (IAF) and Soft Loan Fund for Micro, Small & Medium Enterprises (SMILE) launched in August 2015 to provide soft loan, in the nature of quasi-equity, and term loan on relatively soft terms and Micro Units Development and Refinance Agency (MUDRA) Bank are the initiatives have created hope for the industry. Along with this, ‘Start Up India’ programme has potential to boost entrepreneurship and job creation, industry believes. AS Sanjay Kirloskar, Chairman and MD of Kirloskar Bros and Western India Chapter head of CII, told to Organiser, “Looking at what Government of Bharat is currently doing on this front, Bharat will be surely a global leader in manufacturing soon.” He added that India was world leader in manufacturing just 250 years ago. We had a technology and skills in every sector and it was decentralised across the country. Villages were centers of this manufacturing growth. People from all over the world used to come here for artistically skillfully manufactured goods.
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Showing his confidence in the current government’s policies he said that policies coupled with our traditional manufacturing faculties will reinstate the manufacturing capacities Bharat, making it a global leader again. To make this happen he insisted on attracting global investments and encouraging new innovations through showing our strength on global platforms. He reminded that though big industries bring the large-scale investment, as they are dependent on small and medium scale industries for essential spares and supportive jobs, generating decentalised investment in the “the backbone of manufacturing” is equally essential.
Financing is still the biggest problem for MSMEs. As O P Mittal, President of Laghu Udyog Bharati, an association of Small and Medium Scale Enterprises urged the government to lower the interest rate for MSME. “If housing loan or car finance can be at lower rate, why not it for MSME sector?,” he asked. According to him, “The big industrialists are the major contributors in NPA. On the other hand the small units return the maximum loan. Even then the banks hesitate to fund the MSME. We appeal to the government to fix interest rate for MSME equal to the agriculture sector. Several countries provide loan to MSMEs at minus rate of interest. If not minus rate of interest, lower it as is possible.”
Still there are people, who are rightly termed as ‘cleanovators’. They are trying to bring clean energy and innovation in MSME. Someone like Hemalatha who has revolutionised the concept of e-bikes in Bharat through her Ampere Vehicles Private Limited says, “To make in India, Bhart has to Mine in India first, two minerals such as neodymium for magnets and lead for batteries are still not available in India. China is the world leader to supply these and hence prices are subject to international speculation. If India cannot mine these minerals, a collective bargaining to buy at affordable prices must be facilitated by the government to help MSME companies in Manufacturing.”
Cleanovators like Prabhat Kumar Sinha who has revolutionised the IT education and Training in a state like Bihar through A hybrid Energy Solution (HES) can be role models for other MSMEs as he has assisted the State Government to adopt the technology in about 2000 government schools.
With dynamism and diversity, the sector has shown remarkable adaptability to survive in the volatile economic conditions. If duly supported by the government through timely policy intervention and actualising policy initiatives on the ground, the MSME sector with caliber for employment generation, low capital and technology requirement, promotion of industrial development in rural areas, use of traditional or inherited skill, use of local resources, mobilisation of resources and exportability of products can really become a driver in the glorious growth story of Bharat. —Organiser Bureau