There has been a recent focus of government on the MSME sector and many initiatives have been launched for this sector, however, the MSME sector still suffers from many bottlenecks. In this context, discuss the hurdles, opportunities, and measures for the MSME sector.

MSME sector in India contributes to 30% of GDP & 45% of merchandise exports.

Recent steps taken for the development of MSMEs:

  • Same treatment for manufacturing and service sector MSMEs.
  • CHAMPIONS portal for availing benefits of governmental initiatives for MSMEs.
  • Udyam portal for online registration.
  • Credit guarantee scheme and liquidity infusion scheme under Atmanirbhar Bharat Abhiyan.
  • The World Bank has also provided assistance to the MSME sector in India, which suffered immensely due to the covid pandemic.
  • Government procurement from MSMEs up to 25% of their needs.

Benefits from the development of MSMEs:

  • MSME sector is the largest employer after the agriculture sector.
  • 14% of MSMEs are women-led enterprises.
  • 60% are rural-based enterprises.
  • Acts as the growth engine of the nation.

Challenges associated with MSMEs:

  • Lack of finance due to lack of credit history and financial statements.
  • Liquidity crunch and lack of technological know-how.
  • Various regulatory controls in form of approvals, etc.
  • High competition from cheap imports and India’s inverted duty structure.
  • Non-availability of skilled labour at affordable cost.

Measures to overcome the hurdles:

  • Increasing domestic manufacturing capabilities by leveraging proposed public procurement & projects.
  • This should be accompanied by a simplified regulatory framework.
  • Cluster manufacturing should be promoted.
  • Making Indian products match global standards.
  • Promote zero effect, zero defect manufacturing as envisaged in Make in India.
  • Promote horizontal expansion of MSMEs by including tribal areas, and local businesses and promoting Brand India.

Although, collateral-free assistance and sovereign credit guarantee to MSME will ease the financial crunch, however, the government should devise schemes in such a way that moral hazards and dependency culture can be averted.

More focus on e-commerce, use of ICT tools, digital economy and vocal for local can help MSMEs come up in every node & corner of the country.

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