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Share of MSME sector in GDP will go up: KH Muniyappa

 The Micro Small & Medium Enterprise (MSME) sector has been growing consistently above 10 percent  for the last five years. Thus, we can see that compared to the other larger industries, MSMEs have been growing far better, Union Minister of Micro Small & Medium Enterprises (Independent Charge), K.H. Muniyappa told SME Times in an exclusive interview.

Excerpts of the interview...
Exports from MSME sector have come down. What is your view on this?
K.H. Muniyappa: From the last four years our share in the country's exports, compared to the other sectors, is going up. Only this year it has come down to 36 percent from 40 percent earlier. We are further planning to reach 40 percent share and also to go above the the 40 percent mark.

Export from MSME sector was growing, but this year because of some global reasons it is growing less. We are hoping that we will reach the 40 percent mark soon. Then we will go much ahead.

What your ministry is doing to support MSME exporters?

K.H. Muniyappa: The government has set up an Inter-Ministerial Committee (IMC), headed by Secretary, Department of Industrial Policy and Promotion (DIPP), to address the exports issues of the sector and suggest ways to boost the manufacturing output. The Committee will submit its recommendations within one month.

The Government has been fully appreciative to the needs to support the sector. They have, therefore, more than doubled our Plan allocation for the 12th Plan Period. In the 11th Plan-period it was about Rs.11000 crore and for the 12th Plan-period we have been allocated more than Rs.24000 crore. I thank Planning Commission and Finance Ministry for this.


Under PMEGP we have planned 100 new entrepreneurs for the each district. To set up 100 new enterprises in every district of the country every year under the Prime Minister's Employment Generation Programme (PMEGP), my ministry has been allocated over Rs. 8000 crore in the 12th Plan under the plan to set up about 3.39 lakh enterprises, which would create  27.12 lakh employment opportunities.
   What is the share of MSME sector in GDP at present?
  K.H. Muniyappa: As per CSO estimates the GDP share of MSME is 8.5 percent and I hope it will also go up. The MSME sector accounts  for around 45 percent of the manufacturing output and around 36 percent of total value of exports.

The Government has announced the National Manufacturing Policy where industry sector should reach a level of 25 percent of GDP by the year 2025. MSME sector is the major hope, and, if I may say so, the only hope to attain this objective.

The MSMEs which have been issued Entrepreneurship Memorandum - II grew at more than 18 percent last year. The MSME sector has been growing consistently above 10 percent  for the last five years. Thus, we can see that compared to the other larger industries, MSMEs have been growing far better.

The MSME Ministry has aimed to create 100 new enterprises in each district every year under PMEGP. Please elaborate on this programme.
K.H. Muniyappa: Under PMEGP we have planned 100 new entrepreneurs for the each district. There are 650 districts in the country. The District Collectors are the Chairmen of the selection committee and banks, Khadi Village Industries Commissions, industries department of that state are the members of the selection committee. They will select the entrepreneurs within the three months time. After that with in two months the banks will provide finance. Subsidy will be available immediately. And we have to monitor further, with in a six months, what ever the entrepreneur start the industry it should be started. We have issued the circular from the my department also from the finance department.   

You have said that this is to create more enterprises. Would you like to share the number for that? 
K.H. Muniyappa: To set up 100 new enterprises in every district of the country every year under the Prime Minister's Employment Generation Programme (PMEGP), my ministry has been allocated over Rs. 8000 crore in the 12th Plan under the plan to set up about 3.39 lakh enterprises, which would create  27.12 lakh employment opportunities.

And what is your future plan for this?
K.H. Muniyappa: Further we are planning to double the target from 100 entrepreneurs to 200 in each district. We are preparing the draft programme for that.

The Finance Minister in his Budget has announced measures to support MSMEs. They include setting up of 15 new Tool Rooms and Technology Development Centres. Could you please brief us on that?
K.H. Muniyappa: The Honorable Finance Minister has proposed another 15 tool centers in the budget 2013-14. We are planning to launch such 15 tool centers as soon as possible. Under this we will train youth. We already have 10 tool centers in the country. We will try to put at least one tool center in each state where the young people get a good quality training. From the existing tool centers the placement is more than 95 percent. We are giving them training of international standard and quality at these centers. The training period is from three months to three years (depends on the course). The Government of India, through the world bank, has given Rs 2200 crores for this. We are starting it as early as possible.

Are you planning anything else as package for the sector?
K.H. Muniyappa: The above mentioned are the two areas where we have made the package to create more enterprises. By that employment generation will take place. More than 40 percent of the people of this country are young people. We have to address this issue - for that purpose we are planning the package.

Recently you have said that the Khadi and Village Industries Commission (KVIC) will get a Rs 750 crore aid from the Asian Development Bank (ADB). Please give some detail.
K.H. Muniyappa: In KVIC, we are planning for Rs. 750 crore ADB loan to strengthen khadi societies by replacing obsolete looms with modern equipment. We are developing a new system, which will replace the old machinery. And new machinery will be installed according to new demand and designs. We are going to invest this amount in 300 khadi industries.

And in what time-frame?
K.H. Muniyappa: It is not a time bound loan. It was a package for welfare of Khadi sector from ADB. Rs 96 crore of Rs 750 crore have already been distributed. Khadi industry is a very old industry and to make it modern it will take some time.