Panel clears 8 proposals for funding technology upgradation of MSMEs

“Government of India has initiated consultation process at the highest level to address the grievances of MSME units. Ministry of MSME, (GoI) has signed memorandum of understanding (MoUs) with 15 IITs and other technology institutions for implementing technology upgradation scheme for MSMEs. In its meeting on December 15, 2020, the National Level Project Approval Committee has cleared eight out of nine proposals submitted by MSMEs for government funding for new product or technology development. Two months ago, central government cleared 62 proposals for funding new products or ideas from MSMEs,” said Mr. Devendra Kumar Singh, Development Commissioner, Ministry of Micro, Small and Medium Enterprises, Government of India at a webinar on ‘Reinvigorating MSMEs Post COVID – 19’ organised by All India Association of Industries.

Mr. Singh informed that the Ministry of MSME is monitoring timely settlement of MSME dues by public sector units every month. Since May 2020, more than Rs. 21,807 crore of MSME vendors’ bills have been cleared at the rate of Rs. 4,000 crore per month, which is higher than the earlier pace of Rs. 2,000-3,000 crore per month.

Mr. Singh pointed out that currently there are 18 technology centres under Ministry of MSME and in future more such centres will be set up in partnership with the World Bank. The government will also set up Entrepreneurship Development Cell (EDC) in every district to handhold existing and new enterprises.

Mr. Singh mentioned that more than 15 lakh MSMEs have registered under the newly launched Udyami Portal and 60% of which belong to services sector. He advised all small units to register their products with the GeM portal to participate in government procurement. He also suggested MSMEs to register their products under Geographical Indicators (GI) registry and also secure IPR for their products and technologies by availing government funding.

Earlier in his welcome remarks, Mr. Vijay Kalantri, President, All India Association of Industries, informed, “MSMEs, which was once a vibrant sector with annual growth of 16-18%, have come under severe stress since demonetization, introduction of GST and more recently with the outbreak of the pandemic. Today, the growth of the sector has declined to 10-12%. Government should address the major challenge of timely access to working capital and long term finance at affordable interest cost. Small units end up paying high interest rate for working capital and long term loans, even though government agencies provide housing loan at as low as 7%. Although the government announced Emergency Credit Guarantee Scheme, pace of disbursement needs to be improved. Also, this scheme does not provide fresh liquidity to MSMEs as banks adjust 70% of fresh disbursement against existing loans. Also, credit growth to MSMEs has declined to 8.3% today from more than 12.5% a decade ago.”

Speaking about other challenges faced by MSMEs, Mr. Kalantri said, “Even though SIDBI has many schemes for MSMEs, these schemes are not reaching the intended beneficiaries. Small units are unable to meet export orders because of sharp rise in steel, plastics and other raw materials. Secondly, small scale vendors continue to face delayed payment from large corporate buyers and PSUs.”

Proposing a slew of policy suggestions to address these challenges, Mr. Kalantri said, “The government should hold pre-budget meeting with MSME associations to address their grievances. SIDBI should be allowed to borrow funds at low cost from the global market. Government should vigorously pursue One Village One Product scheme; Emergency Credit Guarantee Scheme should be well formulated and implemented in letter and spirit. There is a need to reduce GST rates on some engineering products, including auto components. Public sector units should be strictly instructed to settle dues of MSME vendors on time. Government should impart entrepreneurial skills for aspiring entrepreneurs, improve ease of doing business by simplifying compliance procedures, labour laws. In order to increase public procurement opportunities from MSMEs, government should increase spending in public projects.”

Ms. Sangeeta Jain, Senior Director, AIAI proposed vote of thanks for the event.

The webinar was attended by representatives from industry associations, academia and not for profit organizations.