If MSMEs are well developed by a nation, it will emerge as a developed nation: Kalraj Mishra
Updated: Nov 16, 2015 11:46:18am
New Delhi, Nov 16 (KNN) The MSME sector is an important segment of the Indian economy. With 3.4 crore plus enterprises and 50% share in the manufacturing, the sector also contributes nearly 40% of the merchandise export from India. However, the sector is suffering from maladies like non availability of credit, procedural wrangles, lack of infrastructure etc. To get acquainted about what the Government is doing to remove the bottlenecks for the growth of the sector, KNN recently talked with Shri Kalraj Mishra, Minister for MSME, Government of India, when he explained the various initiatives being taken by the Government to facilitate growth of the sector. Excerpts from the Interview:
KNN: You have assumed the post of Minister MSME about 16 month back. During this period quite a few initiatives like Udyog Aadhar has been taken. But a lot of issues still need to be resolved – credit, infrastructure, delayed payment etc. What is the position of your Ministry on these issues?
K M: Immediately after taking charge of the Ministry, I noticed that micro enterprises has a major role in creating employment and global experience shows that if MSMEs could be well developed by a nation, it will emerge as a developed nation. My slogan was to make a journey from unemployment to self-employment. ASPIRE, A Scheme for Promotion of Innovation and Rural Entrepreneurship, is the new scheme to promote new entrepreneurs. Under the scheme we have set up Livelihood Incubation centres where small machines costing up to Rs. 20 lakhs have been installed to provide training to 10th pass or ITI pass youth. They will be encouraged to self-employment with assistance under PMEGP, Prime Minister’s Employment Generation Programme, to set up micro enterprises at village level. For skill development we have signed MoU with R –SETIs, Rural Self Employment Training Institutes, established by the Banks. The trainees of R - SETI will also be supported under PMEGP for self - employment. As a result, 3 lakh youth have been supported in one year. The livelihood incubation centres will train youth, including women, from low income group for both employment and self-employment. 100 such centres have already been set up, within 5 years 500 centres will be set up. PPP projects have also been started, with Samsung, who will train and employ 10,000 persons per year.
KNN: Entrepreneurs facing problem with Banks. Many new conditions for loans are being imposed under Basel norms…1, 2, now 3. How your Ministry is going to address the problem?
KM: Bank loan upto Rs. 1 crore is guaranteed under CGTMSE, Credit Guarantee Trust For Micro and Small Enterprises, and available without collateral. About 18lakh entrepreneurs have been supported under CGTMSE. However, the process of establishing an enterprise is quite difficult. Loans are termed NPA if re –payments are not made in 3 months and when declared NPA an entrepreneur face serious hardships. We have tried to address the issue with the Framework for Revival and Rehabilitation of micro small and medium enterprises. Under this an entrepreneur can approach the Bank, if he thinks his loan may turn into NPA. A committee will consider the application for restructuring called corrective action plan. If the case is genuine, a restructuring plan will be developed. The committee will also deal with wilful NPA cases.
For Ease of Doing Business, Udyog Aadhar memorandum has been notified. One page form with 20 points have been devised to replace the lengthy Entrepreneurs Memorandum. The entrepreneur has to submit basic information like Bank account number, Aadhar Card number etc. The application can be submitted online on self-certification basis without any payment and the registration will be immediately intimated. The success of Udyog Aadhar can be judged from the fact that 35000 registration have been done within 1 month.
KNN: MSMES are to get rated by third party and even after that banks do internal rating details of which are not disclosed.
K M: Rating process is costly and often a burden to the enterprise. We are facilitating in this regard also. Government provides subsidy for third party rating upto Rs. 40,000 or 75% of the rating cost, whichever is lower. So rating of the enterprise is supported by the Ministry, on the basis of which it is sanctioned loan by the Banks. For internal rating also we try to facilitate. However, if an entrepreneur adopts dubious means, naturally he has to suffer.
KNN: Entrepreneurs face 90% problems with the States. What your Government is doing in this regard?
K M: Industry is state subject as all infrastructural issues, land, water, power environmental management etc. are under the control of the State. We have tried to involve maximum states in implementation of Udyog Aadhar. Before this there were EM – I and EM – II which were also introduced in consultation with the State Government. Government of India always work in coordination with the states. States like Rajasthan, Madhya Pradesh, Uttar Pradesh are already implementing Udyog Aadhar. Tamil Nadu is also implementing. Tamil Nadu has the largest number of MSMEs, next is Uttar Pradesh. All states are adopting the procedure.
KNN: A lot of people are involved in Agarbatti making, Beauty Parlours etc. How the micro sector can avail the benefits of the schemes of the Ministry. Labour law is another issue.
K M: Micro Entrepreneurs both in service and manufacturing sector are being supported under PMEGP. Labour laws are also being simplified. Prime Minister announced during launching of ‘Shram ev Jayate’ regarding simplification of 16 labour laws. Now to remove the threat of Inspector Raj, computerised system for compilation of data for MSMEs in a particular area has been started and inspection of enterprises is notified 24 hour in advance. The report is to be given within 75 hours. Also there will be no repeat inspection.
KNN: Udyog Aaadhar is a good initiative, but it has to reach each and every segment. This is a great challenge. Dissemination of data in public domain is also responsibility of the Government. How the Ministry is proceeding in this area?
K M: Under Digital India initiative of Hon’ble Prime Minister, we have prepared Industrial profile of all states and also done skill mapping. So we get complete industrial profile, resources mapping, geography etc. of each state and accordingly could plan industrialisation of each state. Finance Minister had announced in his budget speech about 10000 venture capital and a committee for MSMEs. In this regard Kamath Committee was constituted and the committee recommended for Udyog Aadhar. And we have taken the initiative. People have raised the issue of cases where entrepreneur do not have Aadhar Card. In such cases Aadhar Number of any partner or even of the Chartered Accountant may be given. In the extreme case where no Aadhar Number is available, a print out of the form may be taken and submitted to the DIC.
KNN: Delayed Payment to MSMEs have reached Rs. 10000 cr. What Government is doing in this regard?
K M: The Public Procurement Order for Micro and Small Enterprises has been notified in 2012. While all PSU s have not participated fully, still the participation is good. The Order has been made mandatory from 1st April, 2015, All PSUs are not active. Our effort is products of MSMEs are procured by PSUs in larger quantities. We need more efforts. Our intention is to supply more products of MSMEs to PSUs. Facility of tendering has also been introduced as per the notification. We are getting complaints, in fact lot of complaints, say regarding PSU asking for a minimum turnover to qualify. These are not allowed under the Order. We are regularly monitoring. National level Review will be done at Secretary level, every year. I have personally written to all Ministers, Defence, Railways… Ministry Defence has assured more procurement from MSEs. Our objective is to make the MSEs viable and healthy through steady flow of orders from PSUs.
KNN: Delayed payment is a crucial issue. The outstanding payment from corporate sector has reached Rs. 10,000 Crore. What the Ministry is doing to ensure early payment?
KM: There is a problem. We are addressing the issue, Factoring is being planned. Under ease of doing business we will address the delayed payment problem.
KNN: Revival and reconstruction has become a double edged sword for the Banks. How the MSMEs could be supported?
K M: I have mentioned about the Framework for Revival and Rehabilitation of MSMEs Banks have started work, the Committees are being formed. Still if an entrepreneur complains on revival related issues, the matter will be taken up with the Bank.
KNN: How a small entrepreneur will submit complain? Will Government make a portal? How he will reach you?
We have formed a cell for grievance redressal. The complains received are properly followed up and redressed. I am happy to inform you that almost all complains we have been properly addressed and redressed. Most of the complains relate to Banks. Entrepreneurs complain that even after fulfilling the conditionalities of Banks, they are mentioned as NPA. Whenever such complains are received the matter is taken up with the Bank concerned and tried to get resolved.
KNN: Simplification of Labour Laws is a major issue ? How much time Government will take to simplify labour laws ?
K M: Efforts are on to simplify labour laws. Some simplification have already being done. The intention of the Government is to protect the interest of the workers and at the same time provide a congenial environment for the entrepreneurs.
KNN: Khadi is a heritage of India. How it is being promoted? How Khadi budget is being utilised. We need transparency on utilisation of Government Funds.
Production and sale of Khadi has increased during recent period. Khadi production is being supported under KRDP,MDA,SFURTI, work shed development. Regeneration of clusters are being done under SFURTI scheme. The implementation is being done in a transparent manner. We are bringing more transparency through online information about marketing support etc. . The Charkha has been upgraded from4 spindle to 8 spindles. Weaker Khadi institutions are being supported for infrastructural development.
KNN : World over MSMEs are basis for manufacturing. Large enterprises like auto sector, petrochemicals depend on this sector. How Government will materialise the Make in India dream of Prime Minister?
PM has talked about Make in India and manufacturing hub. We are trying to upgrade the small sector to support the auto and other large sectors. The concept of ease of doing business is to facilitate growth of this sector. We are also focusing to skilling of manpower, under the Skill India mission of the P M. To promote manufacturing we are focusing on Zero Defect and Zero Effect to produce without pollution and of quality product. For this we are planning for supporting technology upgradation of MSMEs. Our mission is to promote manufacturing through developing more entrepreneurs, facilitating with ease of doing business and support in marketing linkage. The Make in India concept of the Prime Minister could be realised only through the MSMEs according to my opinion and we are continuously working in this direction.
KNN: Would you like to connect MSMEs with RBI?
K M: MSMEs are already connected. RBI provides guidelines for credit support to MSMEs. The growth of MSMEs is also based on RBI guidelines. RBI was a member of the Task Force. 20% year on year increase in credit to MSEs and 10% annual increase in number of MSE accounts, all these are RBI guidelines. Banks are also following this; a few Banks were not following, but now have started following RBI guidelines. So MSMEs are supported by Banks on the basis of RBI guidelines and I hope in this direction we will be able to promote MSMEs.
KNN: Finally, we would wish that you continue to work for the growth of the MSME sector.
K M: I would also like to thank you for giving me an opportunity to explain the initiatives taken by my ministry to promote and develop MSMEs and also reaching to the entrepreneurs who may not be having full information about the efforts of my ministry. (KNN Bureau)
KNN: You have assumed the post of Minister MSME about 16 month back. During this period quite a few initiatives like Udyog Aadhar has been taken. But a lot of issues still need to be resolved – credit, infrastructure, delayed payment etc. What is the position of your Ministry on these issues?
K M: Immediately after taking charge of the Ministry, I noticed that micro enterprises has a major role in creating employment and global experience shows that if MSMEs could be well developed by a nation, it will emerge as a developed nation. My slogan was to make a journey from unemployment to self-employment. ASPIRE, A Scheme for Promotion of Innovation and Rural Entrepreneurship, is the new scheme to promote new entrepreneurs. Under the scheme we have set up Livelihood Incubation centres where small machines costing up to Rs. 20 lakhs have been installed to provide training to 10th pass or ITI pass youth. They will be encouraged to self-employment with assistance under PMEGP, Prime Minister’s Employment Generation Programme, to set up micro enterprises at village level. For skill development we have signed MoU with R –SETIs, Rural Self Employment Training Institutes, established by the Banks. The trainees of R - SETI will also be supported under PMEGP for self - employment. As a result, 3 lakh youth have been supported in one year. The livelihood incubation centres will train youth, including women, from low income group for both employment and self-employment. 100 such centres have already been set up, within 5 years 500 centres will be set up. PPP projects have also been started, with Samsung, who will train and employ 10,000 persons per year.
KNN: Entrepreneurs facing problem with Banks. Many new conditions for loans are being imposed under Basel norms…1, 2, now 3. How your Ministry is going to address the problem?
KM: Bank loan upto Rs. 1 crore is guaranteed under CGTMSE, Credit Guarantee Trust For Micro and Small Enterprises, and available without collateral. About 18lakh entrepreneurs have been supported under CGTMSE. However, the process of establishing an enterprise is quite difficult. Loans are termed NPA if re –payments are not made in 3 months and when declared NPA an entrepreneur face serious hardships. We have tried to address the issue with the Framework for Revival and Rehabilitation of micro small and medium enterprises. Under this an entrepreneur can approach the Bank, if he thinks his loan may turn into NPA. A committee will consider the application for restructuring called corrective action plan. If the case is genuine, a restructuring plan will be developed. The committee will also deal with wilful NPA cases.
For Ease of Doing Business, Udyog Aadhar memorandum has been notified. One page form with 20 points have been devised to replace the lengthy Entrepreneurs Memorandum. The entrepreneur has to submit basic information like Bank account number, Aadhar Card number etc. The application can be submitted online on self-certification basis without any payment and the registration will be immediately intimated. The success of Udyog Aadhar can be judged from the fact that 35000 registration have been done within 1 month.
KNN: MSMES are to get rated by third party and even after that banks do internal rating details of which are not disclosed.
K M: Rating process is costly and often a burden to the enterprise. We are facilitating in this regard also. Government provides subsidy for third party rating upto Rs. 40,000 or 75% of the rating cost, whichever is lower. So rating of the enterprise is supported by the Ministry, on the basis of which it is sanctioned loan by the Banks. For internal rating also we try to facilitate. However, if an entrepreneur adopts dubious means, naturally he has to suffer.
KNN: Entrepreneurs face 90% problems with the States. What your Government is doing in this regard?
K M: Industry is state subject as all infrastructural issues, land, water, power environmental management etc. are under the control of the State. We have tried to involve maximum states in implementation of Udyog Aadhar. Before this there were EM – I and EM – II which were also introduced in consultation with the State Government. Government of India always work in coordination with the states. States like Rajasthan, Madhya Pradesh, Uttar Pradesh are already implementing Udyog Aadhar. Tamil Nadu is also implementing. Tamil Nadu has the largest number of MSMEs, next is Uttar Pradesh. All states are adopting the procedure.
KNN: A lot of people are involved in Agarbatti making, Beauty Parlours etc. How the micro sector can avail the benefits of the schemes of the Ministry. Labour law is another issue.
K M: Micro Entrepreneurs both in service and manufacturing sector are being supported under PMEGP. Labour laws are also being simplified. Prime Minister announced during launching of ‘Shram ev Jayate’ regarding simplification of 16 labour laws. Now to remove the threat of Inspector Raj, computerised system for compilation of data for MSMEs in a particular area has been started and inspection of enterprises is notified 24 hour in advance. The report is to be given within 75 hours. Also there will be no repeat inspection.
KNN: Udyog Aaadhar is a good initiative, but it has to reach each and every segment. This is a great challenge. Dissemination of data in public domain is also responsibility of the Government. How the Ministry is proceeding in this area?
K M: Under Digital India initiative of Hon’ble Prime Minister, we have prepared Industrial profile of all states and also done skill mapping. So we get complete industrial profile, resources mapping, geography etc. of each state and accordingly could plan industrialisation of each state. Finance Minister had announced in his budget speech about 10000 venture capital and a committee for MSMEs. In this regard Kamath Committee was constituted and the committee recommended for Udyog Aadhar. And we have taken the initiative. People have raised the issue of cases where entrepreneur do not have Aadhar Card. In such cases Aadhar Number of any partner or even of the Chartered Accountant may be given. In the extreme case where no Aadhar Number is available, a print out of the form may be taken and submitted to the DIC.
KNN: Delayed Payment to MSMEs have reached Rs. 10000 cr. What Government is doing in this regard?
K M: The Public Procurement Order for Micro and Small Enterprises has been notified in 2012. While all PSU s have not participated fully, still the participation is good. The Order has been made mandatory from 1st April, 2015, All PSUs are not active. Our effort is products of MSMEs are procured by PSUs in larger quantities. We need more efforts. Our intention is to supply more products of MSMEs to PSUs. Facility of tendering has also been introduced as per the notification. We are getting complaints, in fact lot of complaints, say regarding PSU asking for a minimum turnover to qualify. These are not allowed under the Order. We are regularly monitoring. National level Review will be done at Secretary level, every year. I have personally written to all Ministers, Defence, Railways… Ministry Defence has assured more procurement from MSEs. Our objective is to make the MSEs viable and healthy through steady flow of orders from PSUs.
KNN: Delayed payment is a crucial issue. The outstanding payment from corporate sector has reached Rs. 10,000 Crore. What the Ministry is doing to ensure early payment?
KM: There is a problem. We are addressing the issue, Factoring is being planned. Under ease of doing business we will address the delayed payment problem.
KNN: Revival and reconstruction has become a double edged sword for the Banks. How the MSMEs could be supported?
K M: I have mentioned about the Framework for Revival and Rehabilitation of MSMEs Banks have started work, the Committees are being formed. Still if an entrepreneur complains on revival related issues, the matter will be taken up with the Bank.
KNN: How a small entrepreneur will submit complain? Will Government make a portal? How he will reach you?
We have formed a cell for grievance redressal. The complains received are properly followed up and redressed. I am happy to inform you that almost all complains we have been properly addressed and redressed. Most of the complains relate to Banks. Entrepreneurs complain that even after fulfilling the conditionalities of Banks, they are mentioned as NPA. Whenever such complains are received the matter is taken up with the Bank concerned and tried to get resolved.
KNN: Simplification of Labour Laws is a major issue ? How much time Government will take to simplify labour laws ?
K M: Efforts are on to simplify labour laws. Some simplification have already being done. The intention of the Government is to protect the interest of the workers and at the same time provide a congenial environment for the entrepreneurs.
KNN: Khadi is a heritage of India. How it is being promoted? How Khadi budget is being utilised. We need transparency on utilisation of Government Funds.
Production and sale of Khadi has increased during recent period. Khadi production is being supported under KRDP,MDA,SFURTI, work shed development. Regeneration of clusters are being done under SFURTI scheme. The implementation is being done in a transparent manner. We are bringing more transparency through online information about marketing support etc. . The Charkha has been upgraded from4 spindle to 8 spindles. Weaker Khadi institutions are being supported for infrastructural development.
KNN : World over MSMEs are basis for manufacturing. Large enterprises like auto sector, petrochemicals depend on this sector. How Government will materialise the Make in India dream of Prime Minister?
PM has talked about Make in India and manufacturing hub. We are trying to upgrade the small sector to support the auto and other large sectors. The concept of ease of doing business is to facilitate growth of this sector. We are also focusing to skilling of manpower, under the Skill India mission of the P M. To promote manufacturing we are focusing on Zero Defect and Zero Effect to produce without pollution and of quality product. For this we are planning for supporting technology upgradation of MSMEs. Our mission is to promote manufacturing through developing more entrepreneurs, facilitating with ease of doing business and support in marketing linkage. The Make in India concept of the Prime Minister could be realised only through the MSMEs according to my opinion and we are continuously working in this direction.
KNN: Would you like to connect MSMEs with RBI?
K M: MSMEs are already connected. RBI provides guidelines for credit support to MSMEs. The growth of MSMEs is also based on RBI guidelines. RBI was a member of the Task Force. 20% year on year increase in credit to MSEs and 10% annual increase in number of MSE accounts, all these are RBI guidelines. Banks are also following this; a few Banks were not following, but now have started following RBI guidelines. So MSMEs are supported by Banks on the basis of RBI guidelines and I hope in this direction we will be able to promote MSMEs.
KNN: Finally, we would wish that you continue to work for the growth of the MSME sector.
K M: I would also like to thank you for giving me an opportunity to explain the initiatives taken by my ministry to promote and develop MSMEs and also reaching to the entrepreneurs who may not be having full information about the efforts of my ministry. (KNN Bureau)
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