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MSME initiatives to help food and agro processing have more entrepreneurs
Saturday, 03 November, 2018, 08 : 00 AM [IST]
Ashwani Maindola, New Delhi
Prime Minister Narendra Modi has launched 12 key initiatives and outreach programmes for the Micro, Small and Medium Enterprises (MSME) sector for its growth, expansion and facilitation across the country. The move will help food and agro processing to have more entrepreneurs, according to experts.

Making the announcement on Friday at the MSME Support and Outreach programme held in the national capital, the Prime Minister stated that there were five key aspects for facilitating the MSME sector. “These include access to credit, access to market, technology upgradation, ease of doing business, and a sense of security for employees,” and added that the 12 announcements he is making, will address each of these five categories.

Access to Credit

As the first announcement, Modi announced the launch of the 59-minute loan portal to enable easy access to credit for MSMEs. He said that loans upto Rs 1 crore can be granted in-principle approval through this portal, in just 59 minutes. He said a link to this portal will be made available through the GST portal.

The second announcement was about a 2 per cent interest subvention for all GST registered MSMEs, on fresh or incremental loans. For exporters who receive loans in the pre-shipment and post-shipment period, the Prime Minister announced an increase in interest rebate from 3 per cent to 5 per cent.

The third announcement was that all companies with a turnover of more than Rs 500 crore, must now compulsorily be brought on the Trade Receivables e-Discounting System (TReDS). He said that joining this portal will enable entrepreneurs to access credit from banks, based on their upcoming receivables. This will resolve their problems of cash cycle.

Access to Markets

His fourth announcement was that public sector companies have now been asked to compulsorily procure 25 per cent, instead of 20 per cent of their total purchases, from MSMEs.

His fifth announcement was related to women entrepreneurs wherein 3 per cent of the 25 per cent procurement must now be reserved for women entrepreneurs.

Modi informed that more than 1.5 lakh suppliers have now registered with GeM, out of which 40,000 are MSMEs. He said transactions worth more than Rs 14,000 crore have been made so far through GeM. He said the sixth announcement was that all public sector undertakings of the Union government must now compulsorily be a part of GeM. He said they should also get all their vendors registered on GeM.

Technology Upgradation

Coming to technological upgradation, the Prime Minister said that tool rooms across the country are a vital part of product design and therefore 20 hubs will be formed across the country, and 100 spokes in the form of tool rooms to sustain the sector.

Ease of Doing Business

On Ease of Doing Business, the Prime Minister said that his eighth announcement was related to pharma companies. He said clusters will be formed of pharma MSMEs. He said 70 per cent cost of establishing these clusters will be borne by the Union government.  

The Prime Minister said that the ninth announcement was on simplification of government procedures in which the return under eight labour laws and 10 Union regulations must now be filed only once a year.

The 10th announcement was that now the establishments to be visited by an inspector will be decided through a computerised random allotment.

The Prime Minister noted that as part of establishing a unit, an entrepreneur needs two clearances namely, environmental clearance and consent to establish. He said that the 11th announcement is that under air pollution and water pollution laws, now both these have been merged as a single consent. He further said that the return will be accepted through self-certification.

As the 12th announcement, Modi mentioned that an Ordinance has been brought, under which, for minor violations under the Companies Act, the entrepreneur will no longer have to approach the Courts, but can correct them through simple procedures.

He said the implementation of this outreach programme will be intensively monitored over the next 100 days.

Reacting to the move, Piruz Khambatta, chairman CII west Zone, said that the move would be an effective tool and game changer if properly implemented. Adding to this, Dr S Jindal, president, AIFPA, says that this shows the intention of the government to do something for the MSME sector. He said this decision would nudge the banking system of the country and help MSMEs in getting loans.

“It would help MSMEs in reducing the financial burden and it shows the positive mindset of the government for helping out the sector,” he said and added that this would also help sectors like food and agro processing to have more entrepreneurs thereby enhancing the abilities and capabilities of the sector.   

Currently, businesses with revenue of Rs 5 crore are termed as micro enterprises, those with sales between Rs 5 crore and Rs 75 crore are termed as small enterprises. Businesses with revenue between Rs 75 crore and Rs 250 crore are classified as medium-sized enterprises.

Experts feel that this announcement was to improve credit flow into MSMEs where growth has been much lower which has suffered further by crisis in the non-financial banking companies.
 
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