If we are serious about reaching $5 trillion economies, MSMEs have to play a much bigger role in employment generation, exports, skilling people and making the sector more formalised.
Underlining the importance of Skill up-gradation among MSMEs to bring them at par with globally required standards, Arun Kumar Panda, Secretary, Ministry of Micro, Small & Medium Enterprises, while speaking to ET on the occasion of the World MSME day, reiterated the Government's resolve in bringing more MSME players into the formal fold. "Besides numerous benefits, getting formalised paves the way for timely, adequate and most importantly, cheaper access to credit, which is a major concern for MSMEs, Panda said." Excerpts:
Economic Times (ET): Training in the latest business skill-set is an area where MSMEs lag behind foreign counterparts. How do you plan to focus on the skill development of MSMEs?
Arun Kumar Panda (AKP): Shortage in the skilled workforce is one of the biggest challenges faced by Indian MSMEs. This problem is further aggravated by the fact that while on hand, MSMEs are not able to afford the high cost of skill-sets required to compete effectively, yet they need people who are skilled enough. Aimed to address such a mismatch, we have 18 technology centers and tool rooms which conduct various training programs. These offer around 102 courses, of which, 76 are National Skills Qualifications Framework (NSQF) aligned.
Further, there are other incubation centers being promoted under the Skill India Mission, and several are being run by the National Small Industry Corporation (NSIC), Coir Board and Khadi and Village Industries Commission(KVIC), and the National Institute for Micro, Small and Medium Enterprises(NI-MSME) that offer latest courses relevant to industry's rapidly evolving requirements. Going forward, our focus on this aspect will only gain more momentum.
ET: NDA-II is expected to accelerate many pending reforms in the MSME sector. This includes redefining MSMEs based upon a new turnover limit. When do you expect the new definition to be implemented?
AKP: Yes, that's an important focus area of the NDA Government. We believe, in today's GST- governed business regime, redefining MSMEs based upon turnover will lead to a system that will be more transparent, objective and non-discretionary. Now, since the last bill has lapsed, the Government is again undertaking several rounds of discussions with industry stakeholders, following which the bill will again be taken up in the Parliament.
ET: Tell us about the Ministry's vision to enhance the technological skills of MSMEs - a key concern reported by the industry.
AKP: Both the absorption of technology and the upgradation of technology among MSMEs are critically important aspects of any MSME ecosystem. Considering this, the MSME Ministry, besides many other government ministries and state governments, is working to change the on-the-ground situation. The government's dedicated Credit Linked Subsidy Scheme (CLSS) Scheme is aimed to address this very issue. Besides, the government is in the process of establishing 15 new technology centers that will offer hands-on training on the latest technologies. Also, 20 large technology centers and 100 extension centers are being planned across the country. These aimed broadly to serve three objectives - skill up-gradation, offering consultancy and providing prototyping facilities, will provide training in futuristic technologies such as IoT, robotics, artificial intelligence (AI), virtual reality and 3D printing, among others.
ET: Access to timely and adequate credit is a key concern for MSMEs. How is the Government going to address this issue?
AKP: I understand the RBI committee on MSMEs has recommended a number of specific proposals to address this concern. Not just the timely availability of credit, the high rate of credit is a concern for Indian MSMEs.
Prime Minister's Employment Generation Programme (PMEGP) and Mudra are noteworthy schemes, whereby support is being given for individuals to set up micro enterprises. This year we plan to enhance the budgetary allocation of PMEGP significantly. Last year we had doubled the allocation and this year too, we plan to increase the allocation, perhaps up to three times the allocation of 2017-18.
Further, the corpus has been increased from Rs 2500 to Rs 10000 crore in Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), extending much more comfort to financial institutions that lend to MSMEs. Also, NBFCs are being made eligible to take advantage of this particular scheme, whose credit guarantee percentage has also been enhanced from 50% to 75% in most cases. We are also in discussion with ECGC to formulate many more avenues of credit to be made available for the MSME players.
ET: TReDS Exchange is touted as a game-changer for solving MSME's working capital woes. However, the platform's awareness is still low. How does the government plan to popularise the platform among MSMEs?
AKP: To improve credit flow to MSMEs, the Ministry has brought in that TReDS notification, asking all companies, including PSUs, having turnover more than Rs 500 crore to join the platform. As a result of this initiative, I am told, so far, 604 corporates and PSUs have come onboard. Out of which, 75 are PSUs. Till now, a total of 2,51,988 invoices have been financed on the platform, amounting to Rs 6669 crore. Further, we are regularly discussing this with the Department of Public Enterprises, and with other PSUs to encourage them to come onboard. Indeed, this is a constant process.