Conference on MSME Funding - Opportunities and Challenges

4 Lakh New Micro Enterprises target fixed for creation of new employment opportunities for around 32 lakh unemployed youth in the 12th Five Year Plan under PMEGP says MSME Minister


Shri K.H. Muniyappa, Minister of State (Independent Charge), Micro, Small and Medium Enterprises inaugurated the ‘Conference on MSME Funding- Opportunities and Challenges’ here today.

Speaking at the Conference organized by CII the Minister said that the MSME sector is the backbone for Inclusive Growth and Sustainable Development of our country.

The Minister further added that under PMEGP, the flagship e mployment generating programme of the Ministry since its inception in 2008-09, more than 2.10 lakh new entrepreneurs have been assisted so far upto 31st March, 2013, creating about 19.55 lakh employment opportunities across the country by disbursing Margin Money (i.e. Subsidy) to the tune of Rs.3973.05 crores. In the 12th Five Year Plan under PMEGP, an ambitious target of 4 lakh new micro enterprises has been fixed for creation of new employment opportunities for around 32 lakh persons mainly focusing on the unemployed youth throughout the country, with an outlay of Rs. 7,800 crores.

The Minister stated that under Scheme of Fund for Regeneration of Traditional Industries (SFURTI) which is a major scheme for cluster development, the Ministry plans to support about 800 clusters in the country under SFURTI . In addition, large number of industrial clusters are being taken up under Cluster Development Programme (CDP).

The Minister highlighted that the Ministry has notified a new Public Procurement Policy for Micro & Small Enterprises (MSEs) effective from 1st April, 2012. The Policy mandates that 20% of procurement of annual requirement of goods and services by all Central Ministries / Public Sector Undertakings will be from the micro and small enterprises. The Government has also earmarked a sub target of 4% procurement of goods & services, out of the 20%, from MSEs owned by SC/ST Entrepreneurs. This provides huge business opportunities for MSMEs of the country in Government procurements.

The Minister also said that to ensure better flow of credit to MSEs by minimizing the risk perception of banks / financial institutions in lending without collateral security, the Government is implementing the “Credit Guarantee Scheme”. The scheme provides guarantee cover of up to 85% on collateral-free credit facility extended by lending institutions to new and existing MSEs for loans up to Rs.100 lakh. Under this scheme, more than 11 lakhs proposals have been approved till April 2013 providing guarantee cover for total sanctioned loan amount of Rs. 54,322 crore.

The Minister further highlighted that the Government in the Union Budget of 2013, has made certain key announcements for MSMEs:

i) To encourage MSMEs to grow, the benefits or preferences enjoyed by them will now stay with them for upto three years after they grow out of the category into a higher category.

ii) To provide greater support to MSMEs, the refinancing capability of SIDBI has been enhanced from the current level of Rs.5,000 crore to Rs.10,000 crore per year.

iii) A provision of a corpus of Rs.500 crore to SIDBI has been made in the present budget to set up a Credit Guarantee Fund for factoring.

iv) The Ministry of Corporate Affairs will notify that funds provided to technology incubators located within academic institutions and approved by the Ministry of Science and Technology or Ministry of MSME will qualify as CSR expenditure.

Further, with a view to provide SMEs the access to alternate sources of funding, as per recommendation of the Prime Minister`s Task Force, two dedicated Stock Exchange/ Platform for SMEs have already become operational in National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). The Minister added that the SME Exchange platform will enable MSMEs to raise funds and get listed as public entities. This will transform the ways through which SMEs can have access to investor capital and create wealth for all the stakeholders.

The Ministry has been implementing several schemes for the growth and development of small scale industries in the field of technology & quality upgradation, marketing support and entrepreneurial and managerial development like National Manufacturing Competitiveness Programme (which aims to enhance the competitiveness of the Indian manufacturing industry), Entrepreneurship development and training particularly for the first generation entrepreneurs etc. The Minister added that India’s young demographic profile has the country favourably placed in terms of manpower availability. Keeping in view the increasing number of youth joining the job market in coming years, the Ministry has set a target of training more than 42 lakh persons during 12th Five Year Plan. The training provided by the state-of-the-art 10 Tool Rooms and eight Technology Development Centres helps create quality workforce for the industries. During the 12th Plan period we plan to set up 15 more tool rooms and technology centres in different States.

Minister appreciated that the Canara Bank, a public sector bank, is launching a new term loan for extending Quasi Equity (Risk Capital) assistance to MSMEs for meeting the bonafide expenditure required for the growth of business and expressed hoped that many other banks would also take similar such initiatives for promoting growth of MSMEs.