MSME (Micro, Small and Medium Enterprises)
MSME sector in India is the second-largest sector after agriculture that has evolved as a vibrant and dynamic sector of the country’s economy over the past multiple decades contributing significantly to the nation’s socio-economic development by fostering entrepreneurship and generating massive employment opportunities. The sector is now undergoing a massive transformation.
The vision of MSME aims towards building a supporting ecosystem for MSMEs to enhance their contribution towards making India a global economic powerhouse.
Impact of Covid 19 on MSMEs
The MSME sector almost crash-landed in 2019 due to local lockdowns, delayed payments, and rising costs hurling them into another cycle of financial stress. Extended lockdown had adversely affected the supply of finished goods, acquisition of raw material, and availability of employees to work in production and supply processes. From April to June 2020, the sector faced difficulties related to debt repayments, wages, statutory dues, and so on. This pandemic has affected trade earnings by 20-50%, which is attributed to liquidity crunch and dipping demand.
Some enterprises advanced their ways by shifting focus from non-essential commodities towards fundamental commodities; like the production of hand sanitizer and toiletries, PPE kits, reusable masks, etc., and managed to get by during the crisis. MSMEs present in remote areas also faced a contraction in revenue due to an interrupted supply chain. Numerous corporations laid off their laborers because of their incapacity to pay wages, emptied their workplaces because of incurring expenses, and halted their production since there was no demand. This overall precariousness required a push by the government, to boost market confidence and bring back regular income in the economy.
Recent update:
The Government recently announced an ease in the process of registration for Micro, Small and Medium Enterprises (MSMEs). Under the relaxed norms, MSMEs require only PAN and Aadhaar for registration from now, and that after getting registered, the MSME unit will be getting priority and finance. It was also announced that there is a need to impart training to small units in the field of entrepreneurship and other related aspects.
Similarly, a special incentive package called the ‘Aatmanirbhar Bharat Abhiyan‘ of 20 lakh crore rupees was launched by the government to create multiple opportunities for MSMEs, and to boost tourism with the help of upcoming infrastructure projects.
Furthermore, by redefining MSME, the central government and Ministry of MSMEs have brought in plenty of small-scale industries under the sector, assisting them with their actions, schemes, and concessions.
Out of 15 relief measures mentioned under this scheme, 6 were entirely intended to empower MSMEs. These 6 measures are:
- Definition level change for MSME
- Credit and Finance Scheme
- Allocating Fund of Funds for Equity Participation
- Relief in Non-Performing Asset
- Clearing off dues to MSMEs
- Disallowing Global Tenders
The involvement of the private sector in numerous bottlenecks of the value chain and supply chain system is crucial for the success of various strategies announced by the government.
New steps taken by the government are expected to act as a stimulant for the sector, not only to emerge out of the economic crisis but also to map planning, organizing, and execution of its various schemes and record its impact on MSMEs.
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