At the outset, I would like to extend my heartfelt good wishes for the new year 2019. Every new year brings new hopes and aspirations, new targets and new challenges to foray into unexplored areas. I hope 2019 ushers in a new and rapid growth trajectory for SMEs bolstered by the rising culture of innovation and entrepreneurship in the country, support of Indian government and favourable global economic outlook.
Realising the untapped potential of MSME sector, which contributes a staggering 32% to the Indian GDP, Indian government has been launching a wide spectrum of new policies and programmes and taking a host of measures across the sectors to stimulate its growth. And yet, the roadblocks remain.
Finance, for long, has been the major stumbling block in the growth of small businesses and entrepreneurs. Banks and other institutional creditors are reluctant to lend to this sector owing to its incapability to repay loans and informal nature. NBFCs are becoming increasingly popular but the high interest rate charged by them remains an issue. Indian government needs to take immediate steps to solve the issue of credit to MSMEs.
As digitization becomes the rule rather than an exception, Indian MSMEs need increased government support in terms of enabling technology adoption. Technological inclusion of SMEs will help them in easing their business operations, becoming cost-efficient, expanding their customer base, and accessing global markets.
Marketing of SME products and services is another area where government intervention is needed. Government did undertake a plenty of marketing initiatives like Marketing Assistance & Technological Upgradation Scheme but these have failed to take off.
Training and skill development in MSME sector needs a serious re-look. Initiatives like Pradhan Mantri Kaushal Vikas Yojana and National Skill Development Mission aimed at equipping youth with industry-relevant skills lacked pan-India penetration and suffered from executional flaws.
In the year gone by, government announced that MSMEs can get in-principal approval of loans of up to 1 crore in 59 minutes. Additionally, GST-registered MSMEs have been entitled to interest subvention on fresh or incremental loans. A much welcome step indeed!