As we know, MSMEs, or Micro, Small, and Medium Enterprises play a stellar role in ensuring the growth of a country’s economy. Their contribution towards production, employment, and exports, make them an indispensable part of any economy. In this article, we will discuss on MSME Sector and its importance.
Importance of MSMEs in India
Although the numbers are open to debate, approximately 65 million industrial units in India have an MSME registration. The MSME sector is widely regarded as the Indian economy’s backbone because it employs over 11 crore people. Moreover, it contributes roughly 30% to India’s GDP and approximately 49% to India’s total exports. However, the sector has lately been facing a torrid time, especially during the Covid-19 crisis. Challenges Faced by India’s MSME sector
Several challenges hamper the growth of India’s MSME sector. Let us briefly take a look at the top 7 problems that mar the MSME sector in India.
- The ease of doing business is a bottleneck.
- Lack of adequate financial expertise.
- Inadequate access to financing solutions.
- Insufficient knowledge of the latest technological developments.
- Labour issues.
- Lack of trust.
- Absence of collateral assets to avail loans.
NDA Government Initiatives to Revive India’s MSME Sector
In the section above, we highlighted the top issues that severely restrict India’s MSME sector’s growth. This section will list some of the significant initiatives that will help us understand that, indeed, the MSME sector is the key focus area of the NDA Govt.
- 59-minute Loans
All GST-registered MSMEs to be sanctioned a loan of Rs. 1 crore in just 59 minutes, subject to conditions.
- Interest Rate Rebates
All GST-registered MSMEs will receive a 2% rebate on incremental new loans of up to Rs. 1 crore. The interest rebate on pre and post-shipment credit for exports has also been increased from 3% to 5%.
- Public Sector Procurement
Public sector units, previously mandated to source 20% of their annual procurement from MSMEs, are now required to source at least a quarter of their requirement (25%) from MSMEs.
- Technology Upgrades
The NDA government announced a package of Rs. 6,000 crores towards technological up-gradation for MSMEs.
- MSME Pharma Clusters
The NDA government has announced the formation of MSME pharma clusters. The government will bear 70% of the cost of establishing such clusters.
- Only One Annual Return
MSMEs will now be required to file only one annual return against the eight labour laws and ten other central provisions.
- Freedom from Inspector Raj
The MSME factory inspections will now be sanctioned only through a computerized random selection. Moreover, inspectors will now need to upload inspection reports within 48 hours.
- Environmental Clearances
Instead of the umpteen number of clearances required before, MSMEs now will only need a single air and water clearance and one consent for establishing an industrial unit.
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