Beyond capital and infrastructure, Indian MSMEs seek ecosystem overhaul from new government

Even while PM Narendra Modi has retained power for the next five years, India's micro, small and medium enterprises (MSME), which 24.63 per cent to the GDP from service activities and 33.4 per cent to the manufacturing output, is hopeful of reforms across key challenge areas.

 

Even while PM Narendra Modi has retained power for the next five years, India’s micro, small and medium enterprises (MSME), which 24.63 per cent to the GDP from service activities and 33.4 per cent to the manufacturing output, is hopeful of reforms across key challenge areas. Among the key expectations is around the expert committee that was set-up in January this year to submit a report by the end of June to “understand the structural bottlenecks and factors affecting the performance of the MSMEs,” the Reserve Bank of India had said in a statement. Capital Connect Led by former SEBI Chairman U.K. Sinha, the report would be looking at “current institutional framework to support MSMEs, “impact of economic reforms”, factors affecting “timely availability of finance”, adoption of “global best practices in India”, impact of “MSME-focused policies on the sector”, etc., the central bank had said.

 

“Due to demonetisation, GST, insolvency process of the corporate sector, and problems in the banking and NBFC sector has led MSMEs into deep distress. Because this committee is studying the problems and has met the stakeholders, the government should immediately implement the recommendation of this group when out in the report,” Anil Bhardwaj, Secretary General, Federation of Indian Micro and Small & Medium Enterprises (FISME) told Financial Express Online. The delayed realisation of bills has been among the eternal challenges facing MSMEs from large corporate and government organisations. The government had in October 2017 launched a dedicated portal for MSMEs called MSME Samadhaan to register their cases pertaining to delayed payments. So far, 17,417 applications have been filed by micro and small units out of which 1,302 applications have been mutually settled with buyers while 2,965 applications have been rejected by the MSE Facilitation Council.

“MSMEs are facing huge problems in realising payments from the public sector undertaking with delays. Whenever we try to take advantage of the delayed payment realisation process or facilitation council, it remains ineffective because once you get the order from the facilitation council you have to get it executed by the state government,” added Bhardwaj.