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Govt-panel may propose easier entry and exit rules for MSMEs

NEW DELHI: A government-panel looking at ways to boost manufacturing in Micro, Small and Medium Enterprises (MSMEs) sector is likely to propose easier entry and exit norms for smaller units. 

The government had set up an inter-ministerial committee (IMC), headed by
MSME Secretary Madhav Lal, to look into issues faced by small units and suggest ways to boost the manufacturing in the sector. 

"The panel has discussed lots of issues which are affecting the growth of small units and it is in the process of finalising the report which will be soon submitted to Cabinet Secretary Ajit Kumar Seth for his consideration," an official source said. 

"In the report, the committee is planning to simplify rules for entry of MSMEs who want to start up their business along with creating an efficient framework for exit of sick units," he said. 

"Efficient insolvency laws are required to help entrepreneurs close down unviable businesses and start up new ones. It also helps in controlling financial burden and ensure higher rate of recovery," he added. 

Currently, there is a fear factor among those entrepreneurs who run unviable units and want to exit as the existing insolvency laws do not support them. 

Besides Lal, other members of the 
IMC include Secretary in the Ministry of Labour M Sarangi, Textiles Secretary Zohra Chatterji and Department of Industrial Policy and Promotion (DIPP) Secretary Saurabh Chandra. 

The sector is witnessing a slow growth phase with share of exports falling from 40 percent to 36 percent lately. The ministry expects that the trend would change if necessary steps are initiated. The share of MSME sector may increase up to 50 per cent in country's total exports in the 12th Plan. 

The panel had also held discussions with various industry associations who had put forward issues pertaining to decline in exports, tough entry and exit policies and issues like high cost of credit, obsolete technology and lack of skilled workforce. 

"The panel has asked industry associations to play a more active role in addressing production and competition issues," the official source said. 

Besides stressing on development of infrastructure, the committee is looking at better integration of MSMEs in the entire value-chain. 

The MSME sector employs over 60 million people in about 2.61 crore units and contributes about 45 per cent to the manufacturing activities.