Feb 04, 2010, 05.23 PM IST | Source: Moneycontrol.com

How govt can help MSME sector grow

A recent study by Milagrow in collaboration with IMT faculty outlines the various challenges Indian MSMEs faces, highlights practices of countries across the globe and comes up with a list of recommendations for policymakers to help the sector.

How govt can help MSME sector grow
The micro, small and medium enterprise (M SME ) sector is vital for the development of any economy. While Indian M SME s have, in past years, grown thanks to Indian entrepreneur s known for their dedication and innovation, it may need more than that for the sector to make a real impact on the industrial coming-of-age in the country.

A recent study by Milagrow in collaboration with IMT faculty outlines the various challenges Indian M SME s faces, highlights practices of countries across the globe and comes up with a list of recommendations for policymakers to help the sector.

Indian M SME s, the study finds, face challenges from various fronts. Here are the issues:

  • Inadequate financial support
  • Inability to promote their products and services in domestic and international markets
  • Lack of support from government organisations, large enterprises, etc.
  • Lack of appropriate need-based training and development programmes
  • Lack of knowledge about low-cost brand communication solutions
  • Unavailability of latest news, trends and technologies
  • Lack of adequate networking opportunities
  • Poor knowledge management
“After analyzing the challenges of the Indian M SME sector, 12 countries were studied from Europe, North America and Latin America: Germany, Finland, Italy, Spain, Sweden, United Kingdom, Canada, Mexico, USA, Argentina, Brazil and Venezuela,” the study says. “The European Union, through its several initiatives, has enhanced the productivity and competence levels of the M SME s in its member countries.”

Here are the key recommendations for Indian policymakers at a glance:

  • Reserve 20% as priority sector lending to M SME s
  • Provide 20% reservation for procurement from the M SME sector
  • Collateral free loans of up to Rs 1 crore for highest credit-rated M SME s
  • Loans from the Credit Guarantee Fund Trust For Micro And Small Enterprises (CGTMSE) must incentivise lending institutions by faster feedback mechanism
  • The CGTMSE must facilitate access to international capital bond markets
  • Involve large enterprises in development of M SME s clusters on private-public partnerships (PPPs)
  • Develop integrated cluster competitiveness programmes
  • Promote low-cost information and communication technologies (ICT) solutions for M SME s
  • Provide best in-class training and have an industry and ‘management function’ wise plan through PPP
  • Mentor and hand-hold M SME s with PPP model
  • Facilitate international partnerships for M SME s
  • Incentivise innovation and R&D culture in M SME s
  • Encourage incubation with best in-class practices
  • Encourage environmental compliance at an early stage
To read the complete paper on how the government can help M SME s on these measures, click on the attached document.

To read the full report click here

To read the full report click here

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