Union Budget 2020 India: The minuscule number of medium enterprises in the MSME sector has sought to be moved out of the administrative control of the Ministry of MSME in 2020 budget as they are ‘persona non grata’ in the government, according to industry body FISME. “Keeping in view that medium enterprises have specific needs and they do require policy attention, it would be better than their administrative control is shifted from Ministry of MSMEs to Ministry of Commerce and Industries,” FISME said in its budget expectations to Finance Minister Nirmala Sitharaman.
According to the MSME Ministry’s 2019 annual report, out of 6.33 crore MSMEs in India, only 0.05 lakh are medium enterprises while 3.31 lakh are small and 6.30 crore are micro-units. “There is a strange deep-rooted bias against medium enterprises in India,” said FISME adding that they are “specifically barred from Public Procurement Policy which mandates 25 percent procurement from MSEs. It even bars them from seeking relief against delayed payment through facilitation councils.”
Medium enterprises are the backbone of global value chains (GVC) through which almost two-thirds of global trade is transacted. Countries like Germany, France, and the US realized early that medium businesses possess the capability to adhere to tough standards and withstand vagaries of global trade, said FISME. China, Vietnam and Bangladesh have also in recent years have leveraged these businesses to acquire higher export share globally as they have looked at mid-size enterprises separately from small and large businesses.
The medium enterprises also suggested banks convert part of their credit exposure into equity to their mid-size clients performing well. “The enterprises in the medium sector are ideally suited for growth capital. Option for enterprises to list on the SME Exchange platforms provides ideal market-making and exiting opportunity will result in good returns for the banks,” MSME body added. Medium businesses employ just 1.75 lakh people out of over 11 crore employment in the MSME sector, as per the MSME ministry annual report.