New ecosystem needed for growth of MSMEs

The revamped Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) Scheme, which minister Narayan Rane launched on Thursday, will go a long way in helping the sector, which contributes one-third to GDP. But a great deal more is needed to be done to ensure that MSMEs grow at a brisk pace. Budget 2023-24 provided Rs 9,000 crore to CGTMSE to provide guarantee for additional Rs two lakh crore loans to micro & small enterprises following major revamp measures. The Central government has come up with several other measures to support MSMEs. In Budget 2023-24, it announced a unified Skill India Digital Platform to enable demand-based formal skilling. It facilitates access to entrepreneurship schemes. Then there is Pradhan Mantri MUDRA Yojana (PMMY). The Emergency Credit Line Guarantee Scheme (ECLGS) for MSMNEs has been allocated Rs 50,000 crore. On March 30 of last year, the government had allocated Rs 6,062.45 crore for Raising and Accelerating MSME Performance (RAMP). The programme will improve market and credit access, strengthen institutions and governance at the centre and state levels, enhance centre-state connections and partnerships, resolve late payment difficulties and help green MSMEs.

In November 2021, the government launched the Special Credit Linked Capital Subsidy Scheme (SCLCSS) for the services sector. This was intended to help enterprises in the sector meet technology requirements. In the same month, the MSME Ministry launched SAMBHAV to push economic growth by promoting entrepreneurship and domestic manufacturing. Then there are also a number of schemes and incentives that the government launched earlier for MSMEs.

Some of the problems that MSMEs faced earlier are being sorted out not by the sector-specific steps taken by the government. Infrastructure development, which is top priority for the Narendra Modi government, is helping the entire economy, and thus MSMEs will also be big gainers. Credit has always been an issue with the MSME sector; it still is. Schemes like the CGTMSE, MUDRA, and SCLCSS are helping entrepreneurs, but micro enterprises still lack the wherewithal to access institutional finance. Marketing remains a challenge. Smaller units suffer from lack of resources and skill sets. The state-run National Small Industries Corporation organizes workshops to train enterprises in online and offline marketing of their products and services. But more solutions are needed.

Technology upgrade is another area where a lot needs to be done. Engineers, professionals with corporate experience and other such people have become entrepreneurs but a large section of entrepreneurs are not very educated or informed about technology. They are not capable of technology upgrades. Private sector solutions are required in this area too.Then there is also the paradox of a large number of unemployed people and dearth of skilled employees. Big corporations can afford on-the-job training, but not many MSMEs can afford this luxury. Quite apart from extending credit facilities, the government must strive to create an ecosystem in which solutions to the various problems faced by MSMEs emerge from the private sector.