Confederation of Indian Industry Confederation of Indian Industry … Watch MSME106.pdf · 2018-09-02 · cii National committee on MSME and chairman, hi-tech Group of companies policy

Confederation ofIndian Industry





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this IssueInsideMessage From the Director General .. 1chandrajit Banerjee, Director General, cii

cEo Speak ....................................... 2 Deep Kapuria, chairman, cii National committee on MSME and chairman, hi-tech Group of companies

policy Barometer .............................. 5industry Voices ................................. 9Factfile ........................................... 11

T he Micro, Small and Medium Enterprise (MSME) sector is truly described as the

engine of economic growth as it contributes to the country’s growth and employment generation. the sector employs nearly 73 million people across 31 million enterprises and contributes nearly 9 per cent to india’s GDp. over the last decade, several MSMEs have emerged in new manufacturing sectors and new geographical locations, and the sector has the potential to create inclusive growth for india.

Some of the issues and concerns vis-à-vis MSMEs require immediate attention. First and foremost is Finance. while adequate availability of finance remains a challenge, the terms for accessing credit pose an even bigger challenge. Delayed payments is another issue that the sector is facing. the delay in payments from buyers to the suppliers affects many units.

MSMEs are also facing infrastructure related problems. lack of infrastructure, roads, power and water have impeded the growth and expansion of many MSMEs.

access to affordable technology is critical for the indian MSMEs. to become globally competitive, technological advancement is a must. cii has been advocating easy access to sophisticated technology for MSMEs so that cost and time overruns can be minimized.

the slow pace of economic reforms has adversely affected the confidence of

December 2012, Volume 1, Issue 9

Policycapital rather than having to rely on debt capital. to make finance easily available for MSMEs, in the Union budget, the Government has allocated Rs 5000 crore for india opportunities Venture Fund with SiDBi.

this issue of the cii policy watch takes a comprehensive look at the sector and spotlights the issues that cii has been dealing with in its dialogue with the Government and other stakeholders. n

Chandrajit BanerjeeDirector Generalconfederation of indian industry

MSMEs. therefore, economic reforms need to be accelerated with a focus on the growth of the MSME sector.

cii welcomes several steps taken by the Government of india to address the concerns of MSMEs. the public procurement policy requires Ministries and the central public Sector Enterprises (cpSEs) to procure a minimum of 20 per cent of their annual procurements from MSMEs. of this, 4 per cent has been earmarked for procurement from MSMEs owned by Sc/St entrepreneurs.

the Government's decision to set up a SME exchange for easy availability of finance to the MSMEs will help this sector get equity

Focus: Micro, Small and Medium Enterprises






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CEOSpeak

What have been the key trends in the Indian MSME sector in the last few years?

over the last decade or so, the MSME sector has registered growth on several parameters.

the number of MSMEs has been growing at a healthy rate - there are close to 31 million enterprises in india today, up from 10 million in 2001 – which is in tandem with an increase in products and services offered. the production figures are extremely encouraging with an annual growth rate of 15.8 per cent since 2000.

the sector has been instrumental in providing employment to a large section of india’s 1.2 billion population, employing nearly 73 million people. this again represents an average double digit growth and a constant increase over the last 10 years. the National Manufacturing policy is expected to give a further boost to these numbers.

MSMEs have not only performed well within india, but have made their mark globally as well. Exports grew 18.6 per cent since 1992-93, and if the performance of the sector in the last two decades is anything to go by, then the next decade looks very promising.

in the last few years, MSMEs have ventured into diverse sectors. in some sectors, such as Defence and pharmaceuticals, MSMEs have also explored non traditional options of finance and marketing among others, offering buyers better options in quantitative and qualitative terms. currently 67 per cent of the MSME units are plying their trade in manufacturing whereas about 17 per cent are in the services sector.

the number of women who have made their mark in the sector is also on the rise - close to 14 per cent of the enterprises are owned by women entrepreneurs and we can expect this figure to go up in the coming years.

What are the key issues that are impeding growth in the MSME sector?

Even though the sector has shown promising signs over the last few years, it continues to be plagued by some issues. the lack of affordable finance is a big concern for almost everyone. although the Government and RBi have increased the credit flow, the gap between demand and supply remains wide. this results in other

areas of business getting affected as well. it is not only the availability of credit but payments for deliverables is also an issue. Finance, in some way or the other, has been the leading cause for MSMEs reporting sick.

another issue that has affected the competitiveness of indian MSMEs compared to international MSMEs is the lack of appropriate and affordable technology. without the absorption of proper technology, it would be difficult for indian MSMEs to remain competitive. it has been recognized that comparatively low use of technology is one of the main reasons for the poor competitiveness of the sector.

infrastructure is another issue that has hindered progress. land, power and roads remain big impediments, especially in big cities and metros.

Marketing is another area where indian MSMEs face difficulties. the challenge starts even before the product is manufactured. the marketing activity includes many things including labelling, packaging etc. For exporters, there is extra responsibility of marketing their product abroad as well. all this is to be done by MSMEs which not only compete with other MSMEs but also large organisations on a global scale.

For all the work to come to fruition you need skilled and capable manpower and unfortunately that is a scarce resource. Despite india’s favourable demographic dividend, MSMEs fail to get appropriately skilled workforce.

apart from these, labour issues, environment issues, proper institutional structure to limit wastages and get the best from the resources used by the sector are also impediments.

Solutions such as development of clusters, providing technology at reasonable cost through various schemes, and suitable in-

MSMEs Offer Tremendous Potential for Inclusive Growth

Deep Kapuriachairman, cii National committee on MSME and

chairman, hi-tech Group of companies

the number of MSMEs has been growing at a healthy rate - there are close to 31 million enterprises in india today, up from 10 million in 2001 – which is in tandem with an increase in products and services offered. the production figures are extremely encouraging with an annual growth rate of 15.8 per cent since 2000






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CEOSpeak

the Union Budget 2012–13 has also sown seeds of optimism. the public procurement policy is going to propel growth of MSMEs in the country. associated bodies like National Small industries corporation (NSic) and Small industries Development Bank of india (SiDBi) have also contributed to expediting growth in the sector. NSic, through its marketing assistance scheme and performance and credit rating scheme provide a lot of help to the sector by looking at two of the most pivotal issues the sector has had to contend with.

then the Micro, Small and Medium Enterprises Development act, 2006, has brought a lot of clarity by addressing issues such as delayed payments.

What steps can the Government take to address the issues plaguing the MSME sector?

the Government has a major role to play in ensuring the sector realizes its full potential.

the areas that need immediate attention of the Government are:

i. Finance, including credit

ii. Marketing and procurement

iii. Skill Development and training

iv. infrastructure

v. technology

vi. institutional Structure

all these areas require urgent assistance from the Government. while some measures have been taken, a lot still needs to be done. the cost at which the credit is made available is exorbitant. having said that the banks have increased their lending to the Micro and Small Enterprises (MSEs) by 12.1 per cent and to Medium enterprises by 9.6 per cent in the last year and that on the back of a year in which they increased it by 12.7 per cent for Micro and Small and 39.3 per cent for Medium sectors over the previous year.

Removal of infrastructure bottlenecks would also be of enormous help to the sector. Many of the products manufactured or services offered by MSMEs are often rendered uncompetitive because of high production costs, either because of use of obsolete or expensive technology, or lack

frastructure will go a long way in encourag-ing entrepreneurs and propelling the sector on a high-growth trajectory.

What role has the policy and regulatory framework played in expediting growth in the MSME sector?

any sector that has to do well must get help from the regulatory body. the MSME sector in india has received a lot of support from the Government. the Ministry of MSME and the office of the Development commissioner have announced several schemes to help expedite growth. the credit Guarantee Fund trust for Micro and Small Enterprises (cGtMSE) and credit linked capital Subsidy Scheme (clcSS) have done an excellent job in providing financial assistance to many MSMEs. Since the launch of this scheme, about 15,613 units have availed subsidy of Rs. 813 crores till November 30, 2011.

in the last few years, several steps have been taken to remove bottlenecks impeding growth. the National Manufacturing policy (NMp) is expected to create close to 100 million jobs, which will help address the labour problems the sector faces. Not only will it foster a much better work environment with skilled employees and greater value addition from MSMEs, it will enhance the quality of products being delivered too.

the MSME sector in india has received a lot of support from the Government. the Ministry of MSME and the office of the Development commissioner have announced several schemes to help expedite growth. the credit Guarantee Fund trust for Micro and Small Enterprises (cGtMSE) and credit linked capital Subsidy Scheme (clcSS) have done an excellent job in providing financial assistance to many MSMEs.






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of skilled manpower, or all three. Special attention must be given to improving the infrastructure as a non conducive environment can undo all the good work. Developing clusters of excellence will go a long way in addressing many problems. along with these the authorities must ensure that availability of work places, common facility centers and specialized growth centers for start ups are in place to help MSMEs at every stage.

the onus lies with the Government to make sure that MSME enterprises in the unorganised sector do not fall behind as more than 90 per cent fall in the category. Special attention must also be paid to enterprises in the north-east, where the complex socio-political landscape can have a detrimental affect on the performance of the enterprise. apart from the policy actions already taken up by the Government, the recommendations made by the working group on Micro, Small and Medium Enterprises growth for the 12th Five year plan needs to be incorporated as soon as and as much as possible.

cii recommends the following:

availability of land for MSEs has •to be ensured. State Governments may earmark at least one industrial estate in each block. Government may identify barren lands and allot it to MSEs at affordable price or set up industrial estates.

priority in providing power connection •as well as uninterrupted power should be ensured for MSEs. Electricity act may be amended to stop any unfair practice.

Setting up of common Facility •center (cFc) under Micro and Small Enterprises – cluster Development programme (MSE-cDp) may be allowed for activities not dove tailed under any other verticals

How, in your view, is this sector likely to evolve over the next few years?

in his budget speech, the Finance Minister, Mr pranab Mukherjee said “SMEs are the building blocks of our economy”. this is one sector which, despite the issues, has

tremendous potential. in the coming years, MSMEs will be in new sectors, and more entrepreneurs will emerge from tier 2 and tier 3 cities. with an increasing number of global tie-ups, we can expect indian MSMEs to become global MSMEs which will produce world-class products, aided by advanced technology and a conducive ecosystem.

the last few years has seen the sector grow at a faster rate than the overall industrial sector, and with appropriate policy measures in place, the growth rate can accelerate. the sector currently contributes nearly 9 per cent to india’s GDp; in future we can expect this figure to rise significantly.

How do you think the Union Budget 2012 – 13 is going to affect the sector in the fiscal year?

through the Union Budget 2012 – 13, the Government has tried to solve some of the core problems that have adversely affected the growth of the sector. the major steps taken by the policy makers will allow access to equity capital through the launch of two SME exchanges. the steps allow MSMEs to gain access to equity capital, which is a much better option than the cheaper debt capital and offers much more.

Venture capital access is also going to get easier with the Rs 500 crore india opportunities Venture Fund to be set up with Small industries Development Bank of india (SiDBi). this allows new sectors to be explored. it will also encourage more first generation employers to consider going into newer businesses. it now depends on how SiDBi disburses funds for the benefit of the sector.

the provision that now central public Sector Enterprises and Ministries have to make at least 20 per cent of their purchases from approved MSEs and of these 4 per cent is to come from MSEs owned by Sc/St entrepreneurs will give a big fillip to the sector.

the Budget has also provided for a weighted deduction of 200 per cent for research and development expenditure for an in house facility for a further period of 5 years beyond March 31, 2012. the potential to benefit from this remains huge.

the Budget has also given some other benefits to the sector. the turnover limit for compulsory tax audit of account and presumptive taxation of SMEs has been raised from Rs 60 lakhs to Rs 1 crore and there are capital gains on sale of residential property. all these steps have been welcomed by the sector. compared to last year, this Budget offers a lot more. n

CEOSpeak






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Policy Barometer

T he Micro, Small and Medium Enterprises (MSME) sector plays an important role

in india’s quest for inclusive growth and development. according to the Micro, Small and Medium Enterprises Development act, 2006, an enterprise engaged in the manufacture or production of goods pertaining to any industry is classified as:

a micro enterprise, where the •investment in plant and machinery does not exceed Rs 25 lakh ;

a small enterprise, where the •investment in plant and machinery is more than Rs 25 lakh but does not exceed Rs 5 crore;

a medium enterprise, where the •investment in plant and machinery is more than Rs 5 crore but does not exceed Rs 10 crore ;

an enterprise engaged in providing or rendering of services is classified as:

a micro enterprise, where the •investment in equipment does not exceed Rs 10 lakh;

a small enterprise, where the •investment in equipment is more than Rs 10 lakh but does not exceed Rs 2 crore;

a medium enterprise, where the •investment in equipment is more than Rs 2 crore but does not exceed Rs 5 crore

the sector has recorded noteworthy growth over the last decade, and the number of enterprises has grown from 10 million in 2001 to almost 31 million today.

however, issues such as delayed payments have adversely impacted the growth of this sector.

the MSMED act, 2006, has addressed some important issues in order to promote the development and enhance the competitiveness of the sector.

Delayed Payments

according to the MSMED act, in case the

Policy Barometer

buyer fails to make the payment on time, the buyer shall be liable to pay the amount with compound interest with monthly rests thereon from the appointed day. the aggrieved party may also take the matter with Micro and Small Enterprises Facilitation council. So far, the council has been contacted for 540 cases of delayed payments from across india.

cii believes that delayed payments is not only a breach of contract but adversely affects the viability of the entire supply chain. cii recommends:

Modifying the reporting requirement •of MSMEs by asking them to report receivables that they have from large units. this will address the problem MSMEs face with incorrect reporting by companies which have mounting dues. with XBRl data, the Government can match the data and take immediate action signaling its concern for MSMEs.

Making payment of interest for •payment beyond 45 days mandatory

“core focus should be on the growth of the small enterprises into medium enterprises, and paving the way for the medium enterprises to become large

Arun MairaMember, planning commission, Government of india

enterprises. Effective collaborations among the MSMEs will result in a united voice which the clusters can enable. the twelfth Five year plan emphasises on the implementation so that the benefits of the policy interventions percolate down to the grassroot MSMEs.these include the strengthening of the MSMED act, streamlining of the environmental issues and the consolidation of the labour laws."

from Government departments, public Sector Units (pSUs) and large industry as per the MSMED act.

treating payment of dues to MSE's •beyond 45 days as income in the books of pSEs and large industry.

providing more teeth to the Facilitation •councils, established to address the issue of Delayed payments, across all states, as per the MSMED act 2006.

it is recommended that in a financial •year, in case a large industry (private and public sector) buys minimum of 20 per cent of its goods/ services from MSEs, subject to the transaction having been completed in the form of payment to MSE within 45 days, the large industry would be entitled to a tax benefit.

Factoring

the problems with delayed payments led the Government to introduce the Factoring Bill 2011. the cii National MSME council had been proactively advocating the need






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Policy Barometer

a delay period of, say, maximum 45 days can be made. after the delay period the receivables will be automatically eligible for Factoring on non-recourse basis. a new Factoring vehicle may be created or at least for pSU Receivables under Factoring law guidelines can be framed. alternatively existing factoring companies may be asked to take it up by formulating necessary regulations/frame work. towards this:

i. a financial institution to be created and funded with an initial corpus for Factoring of delayed payments to MSME Units.

“Skill development is a crucial aspect of ict development in the country. we need to create an ict ecosystem that contributes to, and creates wealth in the society . this calls for very close cooperation and support from the industry and at the same time, a very supportive Government. the office of Dc (MSME) is committed to strengthening the MSME sector with specific interventions, in these two (ict & skills enhancement) areas for the enterprises.”

Amarendra Sinhaadditional Secretary & Development commissioner (MSME), Ministry of Micro, Small & Medium Enterprises, Government of india

“MSME occupies an important place in the indian economy. 26 million SMEs employ about 60 million people and account for about 45 per cent of manufacturing output. MSMEs constitute an important part of the export base, contributing about 40 per cent of india’s exports. within the MSME space, more than 90 per cent are micro enterprises, while the rest are small and medium enterprises. the challenge before the Government is

Vivek RaeSecretary, Ministry of MSME, Government of india

to reach MSMEs at the ground level, particularly micro enterprises. For this purpose, the focus of Government programmes is on development of MSME clusters in collaboration with cluster level industry associations. this thrust will be strengthened during the 12th plan [2012-17]. Despite global economic distress, MSMEs have maintained steady growth over the last few years which is evidenced by increased filing of “entrepreneurs memorandum” part i and ii. MSMEs continue to be a vibrant part of the indian economy and all stakeholders need to work together to ensure their rapid growth and development.”

to promote Factoring services for the benefit of MSMEs. the council had also called for a new Factoring vehicle to be set up or for pSU receivables under Factoring law Guidelines to be framed. the Bill will help MSMEs by way of increased cash flow, elimination of default risk and freeing up of assets as collateral elsewhere.

cii recommends promoting Factoring as an alternative and mandated under the MSMED act 2006, to address any delayed payment to MSME. a provision stipulating mandatory Factoring of receivable after






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Policy Barometer

ii. auditors failing to report on delayed payments in the annual Report even after the delayed payment is brought to their notice by the MSME Unit to be subject to a penalty as a percentage of the sum not reported

Public Procurement Policy for Micro and Small Enterprises (MSEs)

cii is pleased with the fact that the Government through the Ministry of MSME has finally brought in the public procurement policy for MSEs order, 2012, which mandates Ministries and central public Sector Enterprises (cpSEs) to make a minimum of 20 per cent of their annual purchases from MSEs approved. of this, 4 per cent is earmarked for procurement from MSEs owned by Sc/St entrepreneurs. the order has come into force with effect from 1st april 2012.

this is expected to give the MSME sector a boost. the policy ensures that there is a readymade market for the products manufactured by the MSMEs as long as they are made according to the standards specified. this kind of practice has been followed by countries all over the world and it has had a healthy effect on the sector and the economy. this will create more opportunities for MSMEs to create better economic growth and generate employment.

Defence Production Policy

another aspect that cii has highlighted is of procurement by Defence sector from the MSME sector. the Defence production policy (Dpp) will enhance the potential of SMEs for indigenization and broadening the defence research and development base of the country. the policy gives first priority to indigenous design, development and manufacture of defence equipment. only when the indian industry is not in a position to make and deliver the equipment in the requisite timeframe, should procurement from foreign sources be done. the Government will take necessary action to provide SMEs as well as academic and scientific institutions support in research and development of defence products.

SME Exchange

cii has been advocating a separate SME platform in the Bombay Stock Exchange

“indian MSMEs increasingly need to become globally competitive and imbibe a culture of innovation and quality standards. indian MSMEs should look to enter into partnerships with companies around the world as well as strive to become a part of the global value chain. Not just with enterprises around the globe, but ideally MSMEs should collaborate much more amongst themselves and explore ways to establish forward and backward linkages. what a small unit cannot do individually can be achieved collectively. the Government can stand as a facilitator for the growth of the sector and create a suitable eco-system which will help enterprises excel.”

C K MishraJoint Secretary, Ministry of MSME, Government of india

“SME Rating agency of india ltd. (SMERa) Ratings have enabled MSMEs to enjoy financial benefits from the lenders in terms of concessional bank credit, lower collateral requirement, better terms and timeliness, as well as adequate credit. SMERa Ratings is also beginning independent assessment-cum-grading of loan proposals before submission to Banks to improve SMEs access to finance through Small industries Development Bank of india's (SiDBi's) loan Facilitation Services”.

Sushil Muhnotchairman and Managing Director, Small industries Development Bank of india






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(BSE) and the National Stock Exchange (NSE). BSE commenced its SME platform under the brand name BSESME Exchange, and NSE followed suit with the launch of its own SME platform 'Emerge'. BSE SME exchange currently has 2 MSMEs listed on their exchange. this could be considered the biggest breakthroughs for MSMEs in india.

the SME exchanges help in creating wealth for all stakeholders by giving MSMEs access to previously inaccessible equity capital.

this step has been welcomed by the industry and is expected to accelerate the growth of MSMEs.

Foreign Direct Investment

although Foreign Direct investment (FDi) in multi-brand retailing is put on hold until all stakeholders reach a consensus on the matter, cii welcomes the decision to allow FDi in retail. this will create new opportunities for MSMEs. cii believes the move would benefit consumers, producers, especially SMEs and generate significant employment.

Besides, it would greatly improve investor sentiment in the country as declining investments have led to lower industry output and slower GDp growth.

Other issues

other issues that cii has been actively seeking to push through with Government and other developmental agencies include;

i. in order to encourage ict use by MSMEs there is need for enhanced depreciation on it products. this would greatly enhance their competitiveness. it is recommended that the Government consider 100 per cent depreciation, once in a block of three financial years, for an annual investment in it equipment and software up to a limit of Rs 25 lakhs, to the MSMEs (for the purpose of the scheme the standard definition of MSMEs as prescribed by the Ministry of Micro, Small and Medium Enterprises, Goi, be considered). the ict hardware/software equipment for which this depreciation is accorded should be excise duty paid/cleared and the software should be original (genuine)/duly licensed.

ii. to facilitate the availability of industrial infrastructure, a corporation/ Special purpose Vehicle (SpV) should be created, which will hold the industrial land/building under its ownership. the MSMEs will use the facilities paying rent/service charges for initial 7-10 years. when the concerned MSME will be financially stable enough it will purchase the property with the option to buy at a fair price at the end of 10 years. these arrangements will (a) help the new enterprises to use the available funds more profitably and (b) facilitate painless exit for the unsuccessful ones.

iii. Emphasis on Self Employment to be supplemented by emphasis on developing skills that are needed more by MSMEs, which do not have resources to provide post employment in-house training resources. practical skills to be enhanced in itis and similar institutes through enhancement of laboratory and workshop facilities in Mechanical, Electrical and Electronics fields. it is suggested that a special Fund be created for this, and an overseeing panel to arrive at the standard facilities to be provided in such labs, and a system for monitoring the syllabus and condition of labs and workshops created under this scheme.

iV. phase out the tax benefits under Sec. 10a & 10 B of the income tax act, popularly known as Stpi scheme: tax benefits under this scheme will cease because of the sunset clause. this will adversely affect over 5000 small software and it services companies in the country. Department of information technology has already taken up the issue with the Ministry of Finance. Since mainly SME companies are being affected it would be appropriate if the MSME Ministry also takes it up strongly.

V. the new Direct tax code states that tax incentives should be investment linked. this works against the MSME sector as this sector by definition is not capital intensive. in fact the approach should be to give incentives based on employment created, as being done by U.K. and many other countries. n

Policy Barometer

“access to adequate funds remains a major impediment to the sustainable growth of the MSME sector in india. the over insistence on collateral security by Banks including SiDBi for providing loans to the MSME sector is one issue. the Government must extend the cGtMSE scheme for loans up to Rs 10 crores, at least for proven entrepreneurs, to facilitate their growth. Most MSME units shy away from initiating litigation against their buyers. the Government needs to bring about necessary changes in the law, making any delay of payment to an MSME a statutory default attracting penal action."

Amit BeheraManaging Director, oripol industries limited






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Industry Voices

the MSMEs in india continue to contribute to sustained economic growth by providing employment to the most vulnerable section of society and train them in specialized skills and contribute about 8 - 9 per cent growth to the GDp annually. yet there remain many bottlenecks for the sector to overcome, including; access to adequate finance at competitive rates of interest and modern technology for enhancing productivity and the bottom line. Graduation from 'micro to small to medium to large' is always a challenge. its high time we gave the sector its due and started framing policies accordingly.

P. Ganeshchairman, cii (SR) MSME Sub-committee and past chairman, cii Kerala State council and Executive Director, Glass & Glazing Systems pvt ltd

MSME units worldwide are not aware of emerging trends like internationalization of business, liberal policies, new products and technologies. identifying such situations and adapting to the paradigm shift is required by them and the MSME sector should concentrate more on the areas like increasing cost, policy changes and skill availability.

Dr Arup Kumar Chattopadhyaychairman, cii (ER) MSME Sub-committee and Managing Director,tata Refractories ltd

For future success of MSMEs, it is high time for the effective implementation of the MSMED act nationwide. Delayed payments to MSMEs by large scale industries affects the profitability of MSMEs by 20 per cent in general as per a recent study done by the Boston consulting Group.

For robust transition of MSMEs to global competitiveness, it is now suggested for the Government of india and RBi to implement enhanced credit to MSMEs at lower interest rates. Being the largest provider of exports and employment, MSMEs deserve this minimum support for their global success.

Yatindra Sharma chairman, cii (wR) Sub-committee on MSMEs and Managing Director, KhS Machinery private limited

MSME Sector, which forms the bottom of the pyramid of indian Economy, needs to be nurtured and supported with favourable policies of the Government and the regulatory bodies backed by sound infrastructure and transportation facilities. a strengthened and revitalized MSME sector can play a pivotal role in bolstering indian Economy.

Raman Salujachairman, cii (NR) committee on MSMEs and Managing Director, oriental Engineering works pvt limited

it must become our national priority to build capacity, augment capability and enhance competency of SMEs in the aerospace and Defence industry for india's armed forces to posses a truly indigenous character. cii has been at the forefront in this endeavour. oEMs and even down to their tier 3 vendors must be fully encouraged through correct policy instruments to partner with indian SMEs to build an indigenous aerospace and defence enterprise now and make india the preferred global hub for aerospace and defence sourcing in the future. Direct and Directed offsets alone can make this possible and Diluted offsets will only lead us astray.

Sujeet SamaddarDirector and cEo, ShinMaywa industries india private limited






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Funding of SMEs in india has so far been lopsided with policy support only for Bank lending but without adequate Risk capital availability. this can only be addressed by encouraging SME focused Venture capital Funds. as india is at the threshold of becoming a Knowledge Economy, allocation of Rs 5000 crore in the Union Budget for providing Risk capital to MSMEs will strengthen this sector by encouraging innovative enterprises among them. proper mechanism for distribution, creating a “Fund of Funds” and spotting the ‘winners’ has to be put in place to make the initiative a success.

in most economies, Factoring is the mainstay of finance for SMEs, but in india Factoring had not taken off due to absence of a legal framework. the Regulation of Factors (assignment of Receivables) Bill now passed by the parliament is a step in the right direction to deal with the perennial liquidity problems of indian MSMEs. however RBi should initiate steps to encourage licensing of more Factoring companies as the number of present Factors is too few.

i am personally very satisfied with these developments as i had pushed for these in various fora on behalf of cii.

A Ramesh KumarManaging Director & chief Executive officer, asia pragati capfin ltd

MSMEs being mostly a family run organization is always short of funds especially during growth and we must have a mechanism from where the funds are made available to them for their growth.

the other two concerns of MSMEs today, Skill crunch, especially for the skilled man power. For this, there should be more interaction between the teaching institutes and MSMEs preferably; students should work for sometime in MSMEs before finally qualifying. Maybe the German model can be amended to be suitable for india.

For technology crunch, our institutes should develop similar packages available on easy terms for MSMEs and again a closer interaction between the institutes and MSMEs will be of great help, especially availability of institutes and laboratories for tests, of course, against cost.

Alka Kaulconvener - MSME panel, cii Delhi State council & Director - QMS and hR & horizon industrial products pvt ltd.

For the indian economy to move beyond low cost exports and global commodity price related variability, it is important to enable an eco-system that promotes entrepreneurship and innovation for long-term stability and gains through measures such as: enabling incubators to play the vital role to provide business support services, making them the hub of innovation and connecting them with research and funding sources; discovering best practices among incubators and allowing this information to be disseminated; supporting the development of business angels through tax policy or by matching finance through co-investment funds; faciliatating the provisioning of debt with minimal collateral for early stage companies and allowing tax incentives for research and development. overall, strengthening the weak layers in the early stage eco-system with cooperation between private agencies, research labs, innovation centers, educational institutions and government bodies. this scenario is easy to move from policy to action and can initiate a strong wave of employment and economic development.

Anupama Arya National chairperson, yi and Managing Director, Mobera Group

Industry Voices

ZEN, as an SME, has participated beneficially in the Ministry of Defence’s initiatives to encourage private sector participation. the Government of india's ambitious target to modernize the indian defence forces provides many opportunities for SMEs to participate in this worthwhile endeavour and simultaneously grow profitably.

Ashok Atlurichairman and Managing Director, Zen technologies ltd






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Factfile

Year Public Sector Banks Private Sector Banks Foreign BanksAll Scheduled

Commercial Banks

Last Friday of No of A/Cs Amt O/s No of A/Cs Amt O/s No of A/Cs Amt O/s No of A/Cs Amt O/s

March 2008* 3.967 1511.374 0.819 469.118 0.065 154.892 4.851 2135.386

March 2009 4.115

(3.73%) 1914.083 (26.64%)

0.678 (-17.21%)

466.563 (0.54%)

0.058 (-10.78%)

180.634 (16.61%)

4.851 (No

change)

2561.280(19.94%)

March 2010# 7.217

(75.38%) 2763.189 (44.36%)

1.131 (66.81%)

648.247 (38.94%)

0.157 (170.69%)

211.470 (17.07%)

8.505 (75.32%)

3622.907(41.44%)

March 2011 7.398

(2.51%) 3694.30 (33.70%)

1.718 (51.90%)

881.16 (35.93%)

0.186 (18.47%)

209.81 (-0.78%)

9.302 (9.37%)

4785.27 (32.08%)

*Source: Scheduled commercial Banks

TABLE1.1: OUTSTANDING CREDIT TO THE MSE SECTOR BY SCBS(No. of a/cs - in million) (amount - Rs. in billion)

S.No Vertical Projected Budgeted Expenditure for 12th Plan (Rs. Cr.)

1 credit and Finance 19450

2 technology Upgradation 9500

3 infrastructure Development 11360

4 Marketing and procurement 2110

5 Skill Development and training 3600

6 institutional Structure 3100

Total 49120

PROPOSED PLAN ALLOCATION FOR 6 MSME VERTICALS IN THE 12TH FIVE YEAR PLAN

Source: MSME annual Report - 2011 - 12

YearTotal No. of

MSMEs (In lakhs)

2000-01 101.1

2001-02 105.21

2002-03 109.49

2003-04 113.95

2004-05 118.59

2005-06 123.42

2006-07 261.01

2007-08 272.79

2008-09 285.16

2009-10 298.08

2010-11 311.52

YearFixed Investment In MSMEs (Rs. Crore)

Production In MSMEs (Rs. Crore – Current prices)

2000-01 146845 261297

2001-02 154349 282270

2002-03 162317 314850

2003-04 170219 364547

2004-05 178699 429796

2005-06 188113 497842

2006-07 500758 709398

2007-08 558190 790759

2008-09 621753 880805

2009-10 693835 982919

2010-11 773487 1095758






12 policy watch

Factfile

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copyright © 2012 by confederation of indian industry (cii), all rights reserved.

No part of this publication may be reproduced, stored in, or introduced into a retrieval system, or transmitted in any form or by any means (electronic, mechanical, photocopying, recording or otherwise), without the prior written permission of the copyright owner. cii has made every effort to ensure the accuracy of information presented in this document. however, neither cii nor any of its office bearers or analysts or employees can be held responsible for any financial consequences arising out of the use of information provided herein. however, in case of any discrepancy, error, etc., same may please be brought to the notice of cii for appropriate corrections.

published by confederation of indian industry (cii), the Mantosh Sondhi centre; 23, institutional area, lodi Road, New Delhi-110003 (iNDia) tel: +91-11-24629994-7, Fax: +91-11-24626149; Email: [email protected]; web: www.cii.in

YearEmployment In MSMEs

(in lakhs)

2000-01 238.73

2001-02 249.33

2002-03 260.21

2003-04 271.42

2004-05 282.57

2005-06 294.91

2006-07 594.61

2007-08 626.34

2008-09 659.35

2009-10 695.38

2010-11 732.17

YearExports By Indian MSMEs

(Rs. Crore)

2000-01 69797

2001-02 71244

2002-03 86013

2003-04 97644

2004-05 124417

2005-06 150242

2006-07 182538

2007-08 202017

2008-09 N. a.

2009-10 N. a.

2010-11 N. a.

PRODUCTS OF MSMEsMore than 6000 products

Machinery & Equipment n.e.c.

4.66%

Other Non-Metalic Mineral Products

3.77%

Repair & Maintenance of Motor Vehicles; Retail Sale

of Automotive Fuel 3.72%

Wood & Wood Products 3.53%

Others 25.82%

Food Products & Beverages 14.26%Wearing Apparel

13.67%

Fabricated Metal Products 8.96%

Repair Mainte-nance of Personal & Household Goods; Retail Trade 8.46%

Textiles 6.78%

Furniture 6.36%

Confederation of Indian Industry Confederation of Indian Industry … Watch MSME106.pdf · 2018-09-02 · cii National committee on MSME and chairman, hi-tech Group of companies policy

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