Already burdened with many infrastructural and policy bottlenecks, the present-day status of Indian MSMEs cannot be described to be very promising. Unquestionably, our MSMEs are today feeling the pinch of sluggish exports from the country. The Dollar Business caught up with Kalraj Mishra, Union Minister for Micro, Small and Medium Enterprises (MSMEs), to understand how he plans to uplift the sector and enhance its competitiveness.

Ahmad Shariq Khan | April 2016 Issue | The Dollar Business

TDB: As per the recent CAG report, there are about three lakh sick MSMEs in India and the incidence of NPAs in these MSMEs is sizeable. How do you plan to revive these sick units?

Kalraj Mishra (KM): We are fully aware of the challenges faced by our MSMEs. For this, we have notified a ‘Framework for Revival and Rehabilitation of MSMEs’. Under this framework, any enterprise can seek revival and rehabilitation benefit through a Committee constituted by the bank with representatives from state governments, experts, regional or zonal head of the bank and the officer in charge of MSMEs credit department of the bank. We are trying to streamline the process.

TDB: Many MSMEs have been urging for the revision of investment caps defining micro, small and medium enterprises as given under MSME Act, 2006? Your thoughts.

KM: Yes, we are aware of this and in this regard, I can tell you the revision of the definition of the Micro, Small & Medium Enterprises (MSMEs), including that of service enterprises, are under consideration of the government.

We have already introduced the bill, 'The Micro, Small and Medium Enterprises Development (Amendment) Bill, 2015', in Lok Sabha and this proposed bill is aimed at replacing the old one and seeks to increase the allowance for investment in plants and machinery in our micro, small and medium enterprises. We believe, once the bill is passed, our MSMEs will be able to gain benefits from the new ceiling limits.

TDB: Despite much buzz about job creations and Make in India by Prime Minister Modi, estimates say there is a requirement of 12 lakh jobs a month. How do you plan to fill this gap?

KM: Our Ministry is conducting skill development programmes aimed at the entire value chain of manufacturing, starting from village industries to state-of-the-art manufacturing, in all key sectors such as engineering, auto component, etc. During FY2014-15, we have successfully trained about 8.37 lakh people through our various programmes across the country. 18 Tool Rooms and Technology Development Centres, under the MSME Ministry, are already providing both long and short-term training to more than 1 lakh youth. However, we accept, their present training capacity is much less than what is required for making our MSMEs globally competitive (in terms of state-of-the-art manufacturing technologies). Additionally, for the same reason, 15 new Tool Rooms are being set up with World Bank assistance during the 12th Five Year Plan period.

TDB: Please tell us about your endeavours aimed at changing the fortunes of the MSME sector in the country?

KM: We are determined to work for the welfare of the MSME sector in the country and in recent times, we have taken a number of initiatives to boost the growth and development of MSMEs in the country. After thorough consultations with various stakeholders, some of the important schemes that we are re-looking are Credit Guarantee Scheme, Credit Linked Capital Subsidy Scheme, Cluster Development Programme and National Manufacturing Competitiveness Programme.

Further, the Ministry of MSME has been interacting with various ministries, departments, state governments, banks and other stakeholders to streamline the mechanism for grant of loans, simplify labour laws and other procedures to facilitate the setting up of MSMEs.

Worth mentioning here is our ‘Skill India and Make in India’ strategies that aim to facilitate investment, foster innovation, enhance skill development and build manufacturing infrastructure in the country. The real objective of this is to ease investment caps and controls to open up India’s industrial sectors to global participation. We believe, this is a well-drawn out strategy and is most relevant to our MSMEs. We plan to connect these initiatives and programmes through a conscious strategy of skill mapping, credit guarantee, and technological upgradation and clustering.

One of the other major schemes of this Ministry is National Manufacturing Competitiveness Programme (NMCP), which we believe is important in achieving zero effect and zero defect manufacturing, whereby we are highlighting the need for enhancing the competitiveness of the Indian manufacturing sector by reducing their manufacturing costs through better space utilisation, scientific inventory management, improved process flows, reduced engineering time etc. This is determined by measuring the productivity vis-à-vis the use of its human capital and natural resources.

TDB: Lack of innovative ways of running a business and entrepreneurship remains an area where Indian MSMEs lag far behind their global counterparts. Please tell us about the various ways you plan to learn from the success stories of global MSMEs?

KM: Given the geographical diversity of India and its high reliance on agriculture, MSMEs could unquestionably be the lifeline of economic development and growth in the coming times for India. We are working closely with various international bodies for enhancing the capacity building of our MSMEs. Our International Cooperation (IC) Scheme is an ongoing scheme for technology infusion and upgradation of MSMEs and their modernisation and promotion of exports.

The scheme encompasses deputation of MSME business delegations to other countries for exploring new areas of technology infusion or upgradation, facilitating joint ventures, improving the market of MSMEs products, foreign collaborations, participation by Indian MSMEs in international exhibitions, trade fairs and buyer-seller meets in foreign countries as well as in India, having international participation, and holding international conferences and seminars on topics and themes of interest to the MSMEs. Apart from these, for the betterment of our MSME sector, we have inked many MoUs with European countries and going forward, I wish to say that we are committed to bringing in the latest skillset and technology from all parts of the world.

TDB: Ease of access to finance is a big challenge for Indian MSMEs. How do you plan to get rid of this bottleneck?
KM: Of late, many initiatives have been taken up by the Government of India in collaboration with Small Industries Development Bank Of India (SIDBI), across states for easy loan facilitation to the vulnerable segments like the micro and small entrepreneurs.

Also, to mitigate the issue of risk perception amongst banks and facilitate enhanced credit, the government has in place, a Credit Guarantee Fund Scheme for micro and small enterprises – that provides guarantee cover for collateral free credit facilities to micro and small enterprises (MSEs). Under the scheme, guarantee cover is provided to collateral free credit facility extended by member lending institutions (MLIs) to the new as well as existing small enterprises on loans up to Rs.100 lakh. The scheme is being operated by the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) set up jointly by the Government of India and SIDBI.

SIDBI also has the Make in India Soft Loan Fund for Micro, Small & Medium Enterprises (SMILE Scheme). The objective of the scheme is to provide soft loans, in the nature of quasi-equity, and term loan on relatively soft terms to MSMEs to meet the required debt-equity ratio for establishment of an MSME as also for pursuing opportunities for growth for existing MSMEs. Focus will be on all the 25 identified sectors as mentioned in Make in India programme.

TDB: How do you plan to counter the threat arising out of cheaper imports from China and other countries, and safeguard Indian MSMEs?

KM: It is true that in many sectors, in which we traditionally had strengths, China is resorting to large-scale dumping. But then we should also not forget that India is very much a part of various multilateral trade agreements and Indian laws are accordingly shaped on the lines of international law. However, there is an anti-dumping Secretariat within the Department of Commerce which takes up anti-dumping cases. As per the current applicable law, our MSME units may appeal to the anti-dumping Secretariat with the necessary evidence against any country, including China. In case, any evidence is found against any particular country, then the matter can be taken up by the Department of Commerce and Ministry of Finance.

TDB: Please tell us about your immediate priorities?

KM: We are making efforts to streamline procedures for establishing an enterprise. In today’s changing times, we are fully aware of the reality that a start-up or entrepreneur not just needs easy credit on one hand but also basic infrastructure on the other, and hence we want to streamline the process of many of these formalities required by entrepreneurs (who largely come from MSME sector).

Also, the government is working towards creating a more conducive environment to establish an enterprise with minimum difficulties. We have recently started Udyog Aadhaar Registration for universal online registration. This will help in streamlining many of our MSME related policies as our MSME units can now avail benefits of every scheme by registering on the website. We believe this initiative will also go a long way in bringing the unorganised sector of MSME into the organised sector, and thus help them grow at a faster pace.