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MSME body AIE seeks clarity on ‘status of MSMEs’ in India for better implementation of policies

Citing the MSME ministry’s annual report data of 6.33 lakh crore unincorporated non-agriculture MSMEs in the country based on the 2015-16 national sample survey, AIE Founder Chairman KE Raghunathan highlighted that the number of MSME registrations on the Udyam portal is not even 50 per cent of the total MSMEs as of 2015-16.

Chennai-based MSME body Association of Indian Entrepreneurs (AIE) has sought clarity from the MSME ministry on the “status of MSMEs” in the country based on the annual report of the MSME ministry in order to formulate or revise policies for a deeper positive impact on the MSME sector. Citing the report’s data of 6.33 lakh crore unincorporated non-agriculture MSMEs in the country based on the 2015-16 national sample survey, AIE Founder Chairman KE Raghunathan highlighted that the number of MSME registrations on the Udyam portal is not even 50 per cent of the total MSMEs as of 2015-16.  

“Does it mean MSMEs existing before 2017 have wound up?” said Raghunathan in a statement. “We have raised a few potential clarifications from the ministry on the status of MSMEs in India.”

The government launched the Udyam portal post Covid in 2020 replacing the earlier Udyog Aadhaar Memorandum (UAM) and Entrepreneur Memorandum – II for enterprises to register with the MSME ministry in order to benefit from different schemes by the ministry including priority sector lending.

The UAM license’s validity was initially till March 31, 2021, but was later extended to December 31, 2021, and further till June last year. During the UAM period (nearly five years), 1,02,32,451 (1.02 crore) registrations were recorded, FE Aspire had reported earlier. 

As of November 22, 3.11 crore units were registered with the MSME ministry on the Udyam portal. This included MSMEs migrated from UAM and EM – II certifications and also new businesses which registered as MSMEs for the first time. According to the MSME Ministry’s 2020-21 annual report, 21,96,902 EM-II filings were recorded during the 2007-2015 period before UAM registration stepped in. 

Raghunathan also sought clarity on the number of closed MSMEs and the reasons. “Is there any data on MSMEs which have closed their operations? If so – State-wise such data and Reasons for their closure? If no such data is collected by the Ministry – then how will they know the need of the Sector and administer schemes to liberate them?” he said. 

The number of MSMEs shut post-Covid during FY23 had more than doubled from the previous fiscal. During FY23, 13,290 Udyam-registered MSMEs were closed, up 113 per cent from 6,222 MSMEs closed during FY22, as per the data shared by Bhanu Pratap Singh Verma, Minister of State in the MSME Ministry in a written reply to a question in the Lok Sabha in July this year. The number had shot up drastically post Covid from only 175 units closed during July-March FY21. 

In the current financial year (till July 18), 5,152 units were closed, taking the total tally of closed MSMEs since July 2020 to 24,839 while 19,687 were shut till FY23. 

With respect to MSME-related schemes, Raghunathan requested for the latest update on the Rs 20,000 crore Subordinate Debt for Stressed MSMEs, Rs 50,000 crore Equity infusion scheme for MSMEs through Self Reliant India Fund (Fund of Funds) and Emergency Credit Line Guaranteed Scheme (ECLGS). 

The Rs 20,000-crore Credit Guarantee Scheme for Subordinate Debt (CGSSD) launched in June 2020 had failed to pick up pace. The scheme, intended to support stressed MSMEs or non-performing asset (NPA) accounts, was able to extend guarantees amounting to Rs 81.78 crore to 756 borrowers only as of December 31, 2021, according to the MSME Ministry’s 2021-22 annual report. As a result, the government had proposed modifications in the scheme guidelines in March 2022. 

For the Rs 50,000-crore Self-Reliant India (SRI) fund, which is managed by the public lender State Bank of India’s (SBI) private equity arm SBICAP Ventures (SVL), Rs 4,885 crore were invested in MSMEs, according to the update shared by Verma in Parliament in July this year. 

Under ECLGS, Rs 2.42 lakh crore guarantees had benefitted 113.75 lakh MSMEs while the bad loans constituted 5.45 per cent of the guarantee amount, according to the data shared by Bhagwat Karad, Minister of State in the Finance Ministry in a written reply to a question in the Lok Sabha on July 24.