They are the backbone of any economy “ the three categories of MSMEs which include micro, small and medium enterprises. A proprietorship, partnership firm, company, trust or society with an investment below Rs 50 crore and annual turnover below Rs 250 crore are eligible for MSME registration. The MSME sector comprises nearly 63 million enterprises, which contribute 30% to India's GDP, 45% to manufacturing, 40% to exports, and provide employment to over 113 million people, per government data.
The role of micro, small and medium enterprises (MSME) in a developing country like India is very obvious. It generates employment creating economic activity, besides promoting allied commercial activities. The figures existing in public with respect to MSME sector's contribution to India’s development are archaic. But in actual terms, it contributes more than 50 per cent of the output by the manufacturing sector and the employment generation is more than five times that of the large enterprises. The service sector is one of the fastest-growing sectors today.
Empowering technology creation
This is despite hurdles and insufficient support from the government since independence. Most MSMEs are labour-intensive and therefore are in a position to generate employment opportunities besides having vast growth potential. The undeveloped and ignored talent is sourced, trained, and gainfully employed by the sector. MSMEs have always been used by large industries as a platform for sourcing trained manpower. They have an important role in supplementing the bigger industries so that the planned activity of development work is timely attended. They provide logistic support along with components, accessories and semi-finished goods.
MSMEs have the capability to innovate and commercialise the product at a much lower cost compared to large units. MSMEs provide ample opportunities for the development of technology which in turn creates settings favourable to the development of small units. The entrepreneurs of small units play a strategic role in commercialising new inventions and products. In the process, the economy reaps the benefit of improved technology.
Most of the MSME entrepreneurs are technocrats having indigenous organisational and management capabilities. They provide productive outlets for enterprising individuals. These entrepreneurs draw their expertise from skills, training, and knowledge acquired during their working tenure. Some have the urge and risk-taking ability based on their confidence in product knowledge. This sector is therefore rightly termed as the seedbed for entrepreneurial talent and a testing ground for new ventures.
Streamlining processes
Initially delay in administrative approvals, hassles with the financial institutions besides suppliers’ non-cooperative attitude creates panic among small business owners. Another big challenge is to supply the product in the market and recover the dues. Generally, there is a mismatch between the planned projections and the actual working. If the entrepreneur is not provided with the cushion, then his downslide begins. Ability of the entrepreneur is key for the success of any venture. An entrepreneur is a pivot around whom the entire enterprise revolves. The small-scale entrepreneurs have to encounter numerous problems relating to over-dependence on institutional agencies for funds, lack of creditworthiness, training, lower profitability and a host of marketing and other problems.
The government of India has initiated various schemes aimed at improving the overall functioning of these units. Ease of doing business will be primarily needed to help this sector. Government should bring in online filing systems and streamline archaic laws. The entrepreneur should not be made to run after the government system and get harassed for no reason. There should be trust-based laws, especially on the revenue side of the government. Moreover, the labour laws need to be eased. Besides, there should be facilitations instead of inspection and punitive attitude. Many initiatives are being taken to help this sector. Online measures are being implemented but only at the application stage. It should also be at the clearance stage, only then the true ease-of-doing-business will be possible.
The risk-taking next-generation has to be nurtured, mentored and a no-hassles environment should be provided so as to bring in new business, new innovations, new investments and new employment opportunities. The government of India has termed this sector as the growth engine of the nation which is driving the economy of this country. If proper thrust is provided, it will definitely help achieve the US $5 trillion goal in the near future.
(The writer is Chairman of Associated Chambers of Commerce and Industry of India (ASSOCHAM) Goa State Council)
