MSMEs should have no interaction with govt officials, all processes must be digitised: Amitabh Kant

Amitabh Kant, a retired top bureaucrat, is presently India's G20 Sherpa

All processes and clearances related to the functioning of micro, small and medium enterprises (MSMEs) must be digitised, and the need for physical interaction with government officials should be totally eliminated, suggested Amitabh Kant, the former chief executive officer of Niti Aayog, on May 4.

"There should be no human interaction with any government official; it should only be digital interaction — make this the easiest, simplest way for MSMEs to grow and prosper. Make India the easiest place to do business in like Singapore and New Zealand," Kant said while speaking to CNBC TV-18 at the sidelines of the HSBC India SME Summit in New Delhi.

"We have done a lot of work on ease of doing business, but we need to scrap all rules, regulations, and procedures for MSMEs," he said, while pointing out that the MSME sector is responsible for "40 percent of our exports" and remains a "key driver of job creation".

Kant, who is presently India's G20 Sherpa, added that MSMEs must "focus on quality products to penetrate global markets".

HSBC India CEO Hitendra Dave, while addressing the event, said banks have been traditionally cautious towards lending to SMEs. "But, now there is enough information on these small companies to enable credit expansion," he pointed out.

The MSME sector, which contributed over one-fourth to India’s gross value added in 2020-21, is "charting a new story" as the pandemic eases, with post-Covid credit growth being consistently higher on a year-on-year basis as well as in comparison with credit growth to large industries, a recent report by the State Bank of India’s research wing said.

Incentives provided by the emergency credit line guarantee scheme were boosting credit flow and there was evidence that MSME units were becoming larger, SBI Research said in the report released in January.

The Centre's focus on MSMEs was reflected in the Union Budget for the fiscal year 2023-24, in which the government allocated a record Rs 22,138 crore for the ministry in charge of the sector.