NEW DELHI: The Rs 5,500-crore India Inclusive Innovation Fund, proposed under the Ministry of Micro, Small and Medium Enterprises (MSME), may face resistance from the Planning Commission. The plan panel wants it to be under the department of science and technology instead of theMSME ministry as it would encourage greater research and development activities in the country, even in hightechnology areas.
"Planning Commission is a strong proponent of an innovation fund but it would have been appropriate to give it to the department of science instead of the MSME ministry," a senior Planning Commission official told ET on condition of anonymity.
According to another official, who also did not wish to be identified, the panel will send its comments to the MSME ministry during the process of inter-ministerial consultations before the proposal is finally put before the Cabinet for approval.
According to the proposal, the fund would be released in two tranches of Rs 500 crore each. Of the total fund amount, 20% funding would come from the government and the remaining from banks, financial institutions and multi-lateral agencies.
The fund, which is expected to be in place by November, will help generate employment and support livelihoods across the country through innovative enterprises. The idea is to promote innovation that will improve competitiveness and efficiency of small and medium enterprises.
Sam Pitroda-led National Innovation Council and the MSME ministry had set up the fund for this sector, considering the higher exposure of MSME in key manufacturing sectors like textile, leather, handicrafts and automobiles.
MSMEs across sectors have been facing challenges such as lack of access to finance, non-availability of collaterals and delayed realisation of receivables. There are over 26 million MSMEs in the country that provide employment to around 60 million people.