The Minister for MSME Shri Vayalar Ravi inaugurated the CII Cluster Summit today. Speaking at the Summit the Minister said “The MSMEs play a pivotal role in the overall industrial economy of our country. It is estimated that in terms of value, the sector accounts for about 45 per cent of the manufacturing output and over 40 per cent of the total exports of the country. Further, the MSE sector has consistently registered higher growth rate compared to the overall industrial sector. The major advantage of the sector is its employment potential at low capital costs. As per 4th All India Census of MSMEs, this sector employs an estimated 60 million persons spread over 26 million enterprises.
The rise of India as a growing power not only in Asia but also at the global stage would require not only a macroeconomic uplift but also a thorough realization of innovation by the MSMEs. Innovation being the key solution to the various challenges being faced by the entrepreneurs, equally important is to realize the need of cluster based approach. As a whole, it facilitates to face market challenges, quicker dissemination of information, sharing of knowledge and best practices and better cost effectiveness due to distribution of common costs. It also provides an effective and dynamic path for inducing competitiveness by ensuring inter-firm cooperation through networking and trust. The geographic proximity of the enterprises with similarity of products, interventions can be made for a large number of units that leads to higher gains at a lower cost, which in turn helps in their sustainability. The cluster approach thus aims at a holistic development covering areas like infrastructure, common facility, testing, technology & skill upgradation, marketing, export promotion.
The Cluster Development approach has played an important role in enhancing the competitiveness of the MSE sector. Apart from the benefits of deployment of resources and economy of scales, the cluster development approach helps in weaving the fabric of networking, cooperation and togetherness in the industry, and thus enabling the industry to achieve competitiveness in the long run. Cluster Development Approach is the answer of the Micro and Small Enterprises to the large scale sector of the country and the world. We realize that the cluster development approach should be part of the business strategy. This approach is the need of the hour and is relevant to the requirements of Micro and Small Enterprises.
The Micro and Small units are generally not in a position to install costly machinery for their critical operations, accept large orders, or infuse large capital due to their limited capital base and limited domain expertise. However, collectively through cluster development approach, the micro and small enterprises can attain the desired goal of being competitive in the present global scenario. The Ministry has adopted cluster development approach as a key strategy for development of micro and small enterprises in various clusters. The Ministry is administering two cluster development programmes, namely, Micro and Small Enterprises – Custer Development Programme (MSE-CDP) and Scheme for Upgradation of Rural and Traditional Industries (SFURTI). Clusters of Micro and Small enterprises are encouraged to take benefits of these schemes. A very structured and methodological approach is adopted.
The cluster development initiatives in various clusters have reportedly delivered remarkable results. The guidelines of the MSE Cluster Development Programme (MSE-CDP) have been comprehensively prepared to provide higher support to the MSMEs. With this, more than 500 clusters spread over across the country have so far been taken up for diagnostic study, soft interventions and setting up of CFCs under the programme. The efforts under the scheme are focused on covering more and more clusters across the country.
In today’s globalised and competitive environment, technology is the key driver of growth and development. To sustain such growth, it is essential to strengthen the technological capabilities of the MSMEs to enable them to move up the value chain. The Ministry has been implementing several schemes for the growth and development of small scale industries. The schemes for increasing the competitiveness of micro and small enterprises in India relate to technology, quality upgradation, support, marketing support and entrepreneurial and managerial development For enhancing competitiveness of the Indian manufacturing industry National Manufacturing Competitiveness Programme has been taken up. There are 10 components targeted at enhancing the entire value chain of the MSME sector to make it competitive. The components are Lean Manufacturing Competitiveness Scheme for MSMEs, Promotion of Information & Communication Tools in MSME sector, Setting up of New Mini Tool Rooms under Public Private Partnership Mode, Technology and Quality Upgradation Support to MSMEs, Support for Entrepreneurial and Managerial Development of SMEs through Incubators, Design Clinics scheme for MSMEs, Enabling Manufacturing Sector to be Competitive through Quality Management Standards and Quality Technology Tools, Marketing Assistance and Technology Up gradation Scheme for MSMEs, Building Awareness on Intellectual Property Rights for the MSME and Marketing Assistance/Support to MSEs.
Availability of adequate credit is paramount to the success of the micro and small enterprises. The micro and small enterprises have traditionally relied on debt financing from banks and non-bank financial institutions. MSEs primarily rely on bank finance for a variety of purposes including purchase of land, building, plant and machinery as also for working capital. However, even for bank financing, they have to provide collateral security. To ensure better flow of credit to MSEs by minimizing the risk perception of banks / financial institutions in lending without collateral security, the Government is implementing the Credit Guarantee Scheme. The scheme provides guarantee cover of up to 85% on collateral-free credit facility extended by lending institutions to new and existing MSEs for loans up to Rs.100 lakh. More than 8 lakhs proposals have been approved under the Scheme so far.
Today access to capital and cost of capital are the biggest challenges for mid size and emerging corporate business. Credit ratings become even more relevant in times of stress as they not only facilitate faster access to capital but also favourable terms of borrowings. NSIC is implementing a credit rating scheme on the behalf of Ministry of MSME. The scheme aims to create awareness amongst micro and small enterprises (MSEs) about the strengths and weakness of their existing operations and to provide them an opportunity to enhance their organizational strengths and credit worthiness. This scheme provides for reimbursement of performance and rating fee up to 75% of the fee charge by the Rating Agency subject to maximum ceiling of Rs.40,000/-. The scheme is getting good response from micro and small enterprises.
The Government has announced a Public Procurement Policy. Therein every Central Ministry/Department/PSU shall set an annual goal for procurement from MSE sector at the beginning of every financial year. Objective is to achieve an overall procurement goal of minimum 20% of total annual purchases of products or services produced or rendered by MSE from the latter in a period of three years. After 3 years, overall procurement goal of minimum 20% will be mandatory. Further, out of 20% target of annual procurement from MSEs, a sub-target of 20% (i.e. 4% out of 20%) will be earmarked for procurement from MSEs owned by SC / ST entrepreneurs. The policy has been circulated to all the Central Ministries / Departments and CPSUs for effective implementation. All the Government Departments and CPSUs have been requested to furnish their Procurement profiles, details of goods and services required by them from MSEs and contact details of nodal officers to be designated.
The Skill and Entrepreneurial Development Programmes of the Ministry of MSME are the flagship programmes of the Government. Keeping in view the increasing number of youth joining the job market in coming years, this Ministry has been set a target of training 1.5 core persons within 2022 and more than 40 lakh persons during 12th Five Year Plan. I am very much assured that Ministry will achieve the target. India’s young demographic profile has favorably placed the country in terms of manpower availability”.
The Minister congratulated the Cluster Championship Awardees who had adopted cluster development approach and implemented the techniques with visible success and hope that other MSMEs will also be encouraged and join the cluster development movement for the benefit of their organizations and the industry.