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Last updated: 28 Jun, 2022  

msme-THMB-2010.jpg Thoughts on MSME Day

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Bikky Khosla | 28 Jun, 2022

The Indian Micro, Small and Medium Enterprise (MSME) sector contributes in a big way to the country’s economy – around 30 percent to GDP, 49 percent to exports and 36 percent to manufacturing. These figures speak for themselves and without an iota of doubt, if we want to achieve the ambitious goal of transforming the Indian economy into a $5 trillion economy, we must strain every nerve to strengthen this sector.

On the occasion of ‘International MSME Day’ (June 27), the Union MSME minister said on Monday that this occasion “serves to remind the Governments to maintain a business environment in which small rural, cottage and traditional industries also get the opportunity to flourish.” Sounds well. The minister added that focussing on their online services has helped Indian MSMEs recover from the adversity arising out of the Covid-19 pandemic and the subsequent Ukraine war.

It is true that the MSME sector, as a whole, managed to stand firmly during the pandemic and come out of the woods, but according to a recent survey, ‘Crisil Research's SME Report 2022’, sharp rise in commodity prices resulted in a contraction in the Ebitda margins of 50 percent of SMEs, compared with the pre-pandemic level. SMEs in several sectors witnessed Ebitda margin erosion during this period.

This situation has hardly changed and even today our MSMEs have continued to shoulder the burden of high costs of steel, cement and chemical input. Also, high freight prices are burning a hole in their pocket. On the other hand, more than 2 crore MSMEs still don’t have access to bank credit. Majority of units still cannot benefit from finance related schemes due to strict eligibility criteria. Delayed payment is still a major challenge for our MSMEs.

I invite your opinions.

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