Endless wait for MSMEs for increase in Investment Ceilings to be a part of 'Make in India'
Updated: Sep 11, 2015 12:45:14pm
New Delhi, Sept 11 (KNN) It appears there is no end of the tunnel for MSMEs to move up the growth path. After nearly a decade of advocacy by the stakeholders, Government finally moved a Bill to the parliament to raise the investment ceiling for MSMEs and it is lying to be discussed and passed by the legislature since April, 2015. With the ongoing slugfest between the Government and the opposition in the Parliament, it is any body’s guess by when the amended act will come in force.
The clarion call of our Prime Minister for ‘Make in India’ and ‘Zero Effect, Zero Defect’ would only materialise when Indian industry will adopt the state of the art technologies and graduate to global scale of operations. MSMEs being the supplier of half of all manufactured products and about 40 per cent of our exports, there is a strategic need for the modernisation and upscaling of this sector to make India, in reality, a global hub for quality products at competitive costs.
By the MSME Development Act, 2006, MSMEs are defined as micro, small or medium as per the investment in plant and machinery up to Rs 25 lakhs, Rs 5 Crore and Rs 10 crore respectively. Any increase in the investment above these limits moves an enterprise out the respective categories. Even considering the rate of inflation, the ceiling should be at least doubled for an enterprise to operate at the same scale as of 2006. And if we consider the minimum investment required for a globally competitive MSME, the need may be for a fivefold increase in the investment ceilings.
Globally, MSMEs are allowed to grow seamlessly in size and scope as their business grows and ultimately they graduate to the corporate world. Many of the world leaders in business today started as small enterprises and have grown to the present Trans - national corporations.
However, the story is quite different for Indian MSMEs. Here, they are restricted by strict definitions and any increase in the size above the cut off limit, deprive them from a host of supports and incentives. So in the fear of losing the facilities of MSMEs entrepreneurs restrict their investments, though may be essential for quality up gradation and cost reduction.
The issue of enhancing the investment limits for MSMEs was taken up by industry body FISME (Federation of Indian Micro and Small & Medium Enterprises) along the MSME Associations since 2008 and after endless procedural wrangles, Ministry of MSME finally could place a Bill to Lok Sabha for enhancing the investment ceiling for each category, micro, small and medium, to Rs 50 lakhs, Rs 10 crore and Rs 20 crore respectively in April, 2015. Now everyone is waiting eagerly for the day when the Bill will be enacted as a law. (KNN Bureau)
The clarion call of our Prime Minister for ‘Make in India’ and ‘Zero Effect, Zero Defect’ would only materialise when Indian industry will adopt the state of the art technologies and graduate to global scale of operations. MSMEs being the supplier of half of all manufactured products and about 40 per cent of our exports, there is a strategic need for the modernisation and upscaling of this sector to make India, in reality, a global hub for quality products at competitive costs.
By the MSME Development Act, 2006, MSMEs are defined as micro, small or medium as per the investment in plant and machinery up to Rs 25 lakhs, Rs 5 Crore and Rs 10 crore respectively. Any increase in the investment above these limits moves an enterprise out the respective categories. Even considering the rate of inflation, the ceiling should be at least doubled for an enterprise to operate at the same scale as of 2006. And if we consider the minimum investment required for a globally competitive MSME, the need may be for a fivefold increase in the investment ceilings.
Globally, MSMEs are allowed to grow seamlessly in size and scope as their business grows and ultimately they graduate to the corporate world. Many of the world leaders in business today started as small enterprises and have grown to the present Trans - national corporations.
However, the story is quite different for Indian MSMEs. Here, they are restricted by strict definitions and any increase in the size above the cut off limit, deprive them from a host of supports and incentives. So in the fear of losing the facilities of MSMEs entrepreneurs restrict their investments, though may be essential for quality up gradation and cost reduction.
The issue of enhancing the investment limits for MSMEs was taken up by industry body FISME (Federation of Indian Micro and Small & Medium Enterprises) along the MSME Associations since 2008 and after endless procedural wrangles, Ministry of MSME finally could place a Bill to Lok Sabha for enhancing the investment ceiling for each category, micro, small and medium, to Rs 50 lakhs, Rs 10 crore and Rs 20 crore respectively in April, 2015. Now everyone is waiting eagerly for the day when the Bill will be enacted as a law. (KNN Bureau)
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