Don’t underestimate the value of MSMEs in $5tn economy

Don’t underestimate the value of MSMEs in $5tn economy

Contribute 30% of GDP, 50% of exports, 10 cr jobs

Production Linked Incentives for MSMEs. Why not, asks LALIT BERIWALA, Director, Shyam Steel Industries Ltd

India’s micro, small and medium enterprises is second in number only to China. MSMEs are integral to our economy contributing 30% to the country’s GDP, 50% to the export and employment generation of over 100 million, next only to the Agri sector. Their contribution towards delivering social justice for containing regional disparities and equitable economic growth are no less important factors for the Government to take note of.

Improved performance of MSME sector is vital for achieving global benchmark efficiency and quality of products being manufactured in India, as it supplies goods and services to big industrial enterprises. The Government, therefore, should invest in providing backend services to improve performance of MSMEs. Lack of technology-based production and low investment in research and development are bottlenecks for the sector to become globally competent. Government could subsidise internationally available technology for adoption by MSME players to improve their product quality, utilizing their existing resources. Hand holding by designated academic institutes of repute in the same geographical territory for product innovation can also support their cause.

For a more equitable distribution of national resources, policy support to MSMEs also can help unleash their potential. For example, if the Government decide to roll out PLI schemes exclusively meant for MSMEs, it can provide them with a coverage against fierce competition with the bigger business houses to stake claims on incentives for improved performance.

Growth of Indian steel industry has been driven by domestic availability of raw materials such as iron ore and coal. Consequently, steel sector has been a major contributor to India’s manufacturing output. For MSMEs to play a bigger role, Government may consider allocation of smaller mines of Iron Ore and Coal through the e-auction process amongst MSMEs alone, which will protect them from the competition with the bigger businesses.

MSME sector, therefore, look forward to an enabling ecosystem provided by the Government in the manufacturing and steel industry domain, with budgetary and policy support, to emerge as an equal partner in making India self-reliant and transcending it to a $5tn economy.

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