Increasing MSMEs’ share in GDP to 40% by 2025 is a herculean task: AIMA
Ease of Doing Business for MSMEs: Former MSME Minister Nitin Gadkari in 2020 had set a target of increasing MSMEs’ share in exports to 60 per cent from 48 per cent and 5 crore additional jobs by 2025 apart from the jump in GDP share.
As of November 12, 2021, loans amounting to Rs 2.28 lakh crore were disbursed under ECLGS, as
per data from NCGTC cited by RBI in its Financial Stability Report. (Image for representation)
Ease of Doing Business for MSMEs: Increasing MSMEs? contribution to India?s
gross domestic product (GDP) from nearly 30 per cent to 40 per cent by 2025 is
a herculean task for which government, institutions, and banks have to provide big support to MSMEs, according to management profession body All India Management Association (AIMA). Addressing the association?s 11th convention on MSMEs, JS Juneja, AIMA MSME Committee Chairman and one of its past President said, “MSMEs have a responsibility to go from 30.5 per cent contribution to GDP, which is nearly $1 trillion, to 40 per cent or $2-trillion contribution of targeted $5-trillion economy in five years which is a herculean task.” AIMA represents over 38,000 members and close to 6,000 corporate/institutional members through 67 local management associations in India.
“We need growth of at least 10 per cent to reach that target. So, the government and institutions have to provide big support to MSMEs. Bankers also have to provide resources such as lending to MSMEs although they are scared for it being a high-risk area,” Juneja said in his address on Friday. Former MSME Minister Nitin Gadkari in 2020 had set a target of increasing MSMEs? share in exports to 60 per cent from 48 per cent and 5 crore additional jobs by 2025 apart from the jump in GDP share. MSMEs sector had created 11 crore jobs in India, Gadkari had said at an online event in October 2020.
“If that (increase in GDP share) has to be achieved, far more needs to be done. Training workers or skill development isn?t sufficient. My personal belief is that it is important to train MSME promoters as well. The bottleneck is at the top, if somebody is not growing and struggling, you have to look at the leadership. MSME promoters don?t have a very formal business education. They learn on their own or if it is a family business, they learn from their parents. Investment into these MSME entrepreneurs will go a long way otherwise they will permanently be looking for incentives from the government,” said CK Ranganathan, President, AIMA.
If it is about innovation in business, then a training programme on how to be innovative should be there on a continuous basis, suggested Ranganathan. “Two other things MSMEs needed is technology advancement. So, cluster-based technology advancement is required with a lot of training, focusing on what MSMEs in other countries are doing, and how can Indian MSMEs can access that. This will go a long way for entrepreneurs. Another is industry 4.0. If they embrace it, this will help in increasing their profitability. That way they can generate more employment,” he added.
The former Chairman at National Small Industries Corporation, Juneja also urged the government for a special financial package for micro units and others who haven?t been able to avail credit under the Rs 4.5 lakh crore Emergency Credit Line Guarantee Scheme. The current scheme provides credit to only those borrowers who have availed loan for business earlier. As of November 12, 2021, loans amounting to Rs 2.28 lakh crore were disbursed under the scheme to MSMEs and other businesses by banks, out of Rs 2.82 lakh crore loans sanctioned, as per data from the National Credit Guarantee Trustee Company (NCGTC) cited by the Reserve Bank of India (RBI) in its Financial Stability
“MSMEs have faced those (Covid-related) problems very boldly. Many are out of the woods, thanks to the government. However, many micro enterprises or those that hadn?t availed credit from banks were left high and dry. So, I would urge the govt to come out with a special package to give some credit to micro units so that they can also survive,” said Juneja.