Analysis of Support and Outreach Initiative for MSME Sector

Points to be covered… Introduction to MSMEs Importance of MSMEs Issues plaguing this sector Important reforms undertaken 12 initiatives announced How effective will the reforms be?

Introduction to MSMEs

Importance of MSMEs There are about 65 million units employing about 120 mn people MSME accounts for 8% of GDP It accounts for 40% of the total exports It accounts for 45% of the manufacturing output After agriculture sector, it is the MSME which is the largest generator of employment

Issues Plaguing this sector Credit availability NPAs GST Access to market

Issues Plaguing this sector Higher input costs IBC Lack of skilled labour availability

Some of the important reforms CGTMSE PPP MUDRA PSL Corporate Tax MSME amendment bill

Initiatives announced – Access to Credit 59 minute loan portal has been launched 2% interest subvention for all GST registered MSMEs Companies with a turnover more than ₹ 500 crore, must now compulsorily be brought on the Trade Receivables e-Discounting System (TReDS)

Initiatives announced – Access to market All public sector undertakings of the Union Government must now compulsorily be a part of GeM The Public sector companies have been asked to compulsorily procure 25%, instead of 20% of their total purchases, from MSMEs 3% of the procurement reserved for women entrepreneurs

Initiatives announced – EoDB, Technology Upgradation Random allocation for Inspections/Visits Returns under 8 labour laws to be filed once a year Single license under Air and Water pollution acts Amending Companies act Establishing pharma MSMEs Hub and Spoke model for tool rooms

Evaluation of these reforms Doesn't address the structural issues Implementation is the key Targeted lending is fraught with risks Undue pressure on the banking sector?

Having said so These reforms will not yield the results overnight The reforms will lead to formalization It is a right step towards strengthening the MSME sector Enter into bilateral and multilateral agreements to provide more market access