Panel for better credit flow, easy closure process for SMEs

NEW DELHI: A government-panel looking into issues faced by MSMEs has submitted its final report to Cabinet Secretary Ajit Kumar Seth, suggesting ways to improve credit flow and efficient framework for closure of unviable businesses.

The government had set up an inter-ministerial committee (IMC), headed by Micro, Small and Medium Enterprises (MSMEs) Secretary Madhav Lal, to look into problems faced by small units and suggest measures to enhance manufacturing in the sector.

"We have submitted our report to the Cabinet Secretary recommending enhancement and growth acceleration for the sector in the short and medium-term. We have suggested better integration of MSMEs in the entire value-chain," an official told PTI.

The recommendations include simplification of rules for entry of small units, easy flow of credit, better labour laws, and efficient framework for closure of unviable businesses, he added.

The small-scale industry has been facing problems like decline in exports, high cost of credit, obsolete technology, lack of skilled workforce and tough entry and exit policies.

Besides Lal, other members of the IMC include Secretary in the Ministry of Labour M Sarangi, Textiles Secretary Zohra Chatterji and Department of Industrial Policy and Promotion (DIPP) Secretary Saurabh Chandra.

The sector has been witnessing a slow growth phase with share of exports falling from 40 per cent to 36 per cent lately. The Ministry expects that the trend to change if necessary steps are initiated in time.

Expressing concern over the fact that SME segment as a whole has been growing much faster in the unorganised segment vis-a-vis the organised one, the official said, "If you take the number of these units which are not registered or are in the unorganised sector, it is already above 95 per cent and if it grows at a rate which is 8 times faster than the organised sector then it is a matter of worry."

"Therefore, we need to see that how this unhealthy trend can be reversed," he said, adding that there is a need to bring about a situation wherein more-and-more MSMEs function in the formal sector.

The MSME sector employs over 60 million people in about 2.61 crore units and contributes about 45 per cent to the manufacturing activities.

Source - PTI (www.economictimes.com) Dt. 02-10-2013