Analysis of Support and Outreach Initiative for MSME

Points to be covered… • Introduction to MSMEs • Importance of MSMEs • Issues

Importance of MSMEs • There about 65 million units employing about 120 mn people

Issues Plaguing this sector • Credit availability • NPAs • GST • Access to

Issues Plaguing this sector • Higher input costs • IBC • Lack of skilled

Some of the important reforms • CGTMSE • PPP • MUDRA • PSL •

Initiatives announced – Access to Credit 1. 59 minute loan portal has been launched

Initiatives announced – Access to market 4. All public sector undertakings of the Union

Initiatives announced – Eo. DB, Technology Upgradation 7. Random allocation for Inspections/Visits 8. Returns

Evaluation of these reforms • Doesn't address the structural issues • Implementation is the

Having said so • These reforms will not yield the results overnight • The

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Analysis of Support and Outreach Initiative for MSME Sector

Points to be covered… • Introduction to MSMEs • Importance of MSMEs • Issues plaguing this sector • Important reforms undertaken • 12 initiatives announced • How effective will the reforms be?

Introduction to MSMEs

Importance of MSMEs • There about 65 million units employing about 120 mn people • MSME accounts for 8% of GDP • It accounts for 40% of the total exports • It accounts for 45% of the manufacturing output • After agriculture sector, it is the MSME which is the largest generator of employment

Issues Plaguing this sector • Credit availability • NPAs • GST • Access to market

Issues Plaguing this sector • Higher input costs • IBC • Lack of skilled labour availability

Some of the important reforms • CGTMSE • PPP • MUDRA • PSL • Corporate Tax • MSME amendment bill

Initiatives announced – Access to Credit 1. 59 minute loan portal has been launched 2. 2% interest subvention for all GST registered MSMEs 3. Companies with a turnover more than ₹ 500 crore, must now compulsorily be brought on the Trade Receivables e-Discounting System (TRe. DS)

Initiatives announced – Access to market 4. All public sector undertakings of the Union Government must now compulsorily be a part of Ge. M 5. The Public sector companies have been asked to compulsorily procure 25%, instead of 20% of their total purchases, from MSMEs 6. 3% of the procurement reserved for women entrepreneurs

Initiatives announced – Eo. DB, Technology Upgradation 7. Random allocation for Inspections/Visits 8. Returns under 8 labour laws to be filed once a year 9. Single license under Air and Water pollution acts 10. Amending Companies act 11. Establishing pharma MSMEs 12. Hub and Spoke model for tool rooms

Evaluation of these reforms • Doesn't address the structural issues • Implementation is the key • Targeted lending is fraught with risks • Undue pressure on the banking sector?

Having said so • These reforms will not yield the results overnight • The reforms will lead to formalization • It is a right step towards strengthening the MSME sector • Enter into bilateral and multilateral agreements to provide more market access