The micro, small and medium enterprises will get a leg-up from the Union government, if one takes this year's Union Budget into account. The band-aid for the sector became necessary after the impact of demonetisation and the implementation of GST last year.
“We are looking to collaborate with states, private players and all others for setting up six centres of excellence for different trades. These centres would be hosted online in Delhi and seek to benefit all entrepreneurs in these sectors,” Giriraj Singh, the minister of state for micro, medium and small industries told THE WEEK, in an interview.
“We want Indian entrepreneurs to be profitable on a global scale, maintain cost and quality and provide employment. Prime Minister Modiji has said that this sector is to become the economic backbone of India. Our goal now is to create employment,” said Singh.
India's micro, small and medium enterprise sector jointly employs 40 per cent of the workforce, and comprises 35 per cent of all exports from the country and a similar percentage in manufacturing sector.
MSME ministry received a 59 per cent hike in budget allocations from Finance Minister Arun Jaitley this year.
This money is expected to be spent on having more relevant online compendiums for entrepreneurs enabling them to access credit, benefits of government schemes or funding from banks and investors. The ministry would also allocate a health sum towards development of new MSME hubs, which has adequate infrastructure to ensure quality production and marketing.
According to NSSO survey data, close to 6.8 crore livelihoods were supported by the sector in 2015-16.
To negate naysayers, who say that jobs within the sector have witnessed a downfall, the ministry recently concluded a survey jointly conducted by MDI Gurgaon, National Small Industries Corporation and industry body India SME Forum.
Singh shared that the live survey found that on an average each MSME unit employs about seven people. The survey also explored future job possibilities with micro, medium and small industries. Among the respondents—who ran into thousands—a majority (40 per cent) said they will employ five people during the year. About 20 per cent said they will need to employ 6 to 26 people this year, while 28 per cent said they will have no new jobs to offer in 2018-19.
The department has gone a step ahead and deciphered out of GST Network data of micro, small and medium sector registered with the tax network alone, employs over seven crore people. “More than 8.33 crore people have changed from informal jobs to formal jobs last year,” said Singh.
“We have revised the NPA classification for the sector to 180 days from 120 days earlier. Now, expectations are for having better market-oriented training programmes,” said Singh. Banks have recently rephrased their criteria for disbursing loans to MSME sector under the government's MUDRA loan scheme.
As a result, the disbursements in loans have gone up significantly for the sector over the past few months.
The MSME ministry is also looking to bank on solar charkhas (spindle) in a separate programme very soon. “The goal is one spindle and one job. In this decentralised yarn producing model, each person should be able to make anything between Rs 6,000 and Rs 10,000,” said Singh.
The textile sector had witnessed large reduction in numbers of formal and informal jobs in the sector due to a fallout of demonetisation and GST. “Our population is constantly growing and it is estimated that each person needs about 25-32 metre of clothing. This scheme would seek to take advantage of that,” Singh said.
The textile and garments sector in India is estimated to provide 6.2 crore jobs, where 70 per cent earn less than Rs 10,000 per month from these jobs. Singh said he is hopeful that the slide in exports due to GST has now been arrested and, going ahead, exports are bound to increase.
Exporters are still facing problems in relation to receiving their GST refunds owing to technical glitches in the GST system. It is estimated that an amount exceeding Rs 28,000 crore of undistributed GST refunds to exporters, is still lying unused with the Union and state governments.