The share of the Indian Micro, Small and Medium Enterprise sector is expected to increase up to 50 percent in nation's total exports in the 12th Plan from 36 percent now, Minister of State (Independent Charge) for MSME K H Muniyappa said on Thursday.
"Earlier, it (the share of MSMEs in the country's total exports) was 40 percent, but now it has reduced to 36 percent due to demand slowdown in western markets," Muniyappa said, adding that "the contribution is likely to be up to 50 percent by 2017".
He added that this increase is expected on account of increasing demand from the western and emerging markets.
Muniyappa was talking to reporters on the sidelines of a CII function in New Delhi.
On the credit problem, the minister said that the bank is supporting to boost finance and help in the growth of MSME exports in the country.
He stressed that availability of adequate credit is paramount to the success of the micro and small enterprises (MSEs). MSEs primarily rely on bank finance for a variety of purposes including purchase of land, building, plant and machinery as also for working capital.
In fact, the government has implemented the "Credit Guarantee Scheme" that provides cover up to 85 per cent on collateral-free credit facility extended by lending institutions to new and existing MSEs for loans up to Rs 100 lakh, he said.
"You will happy to know that more than 11 lakhs proposals have been approved under the scheme till April 2013 providing guarantee cover for total sanctioned loan amount Rs 54, 322 crore," he added.
The minister also said that flexible and easily availability of loan is essential. We need to encourage entrepreneurship as well as good quality and standards.
He asked entrepreneurs (especially SMEs) to not only avail loans but to repay them timely.
The MSME sector contributes around 9% of GDP and accounts for around 45% of the manufacturing output at the moment.
The sector of 3.6 crore thriving enterprises employing over 8 crore persons but the sector is continuously exhibiting a growth rate far above the large sector.
The main markets of 20 most exported MSME product groups, which constituted more than 90% of MSME exports during 2009-12 included USA, European Union (EU), UAE, Turkey, Singapore, Hong Kong, Israel and Saudi Arabia.