Want to revive sick enterprises: MSME Minister

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Saurabh Gupta | 28 Aug, 2012
I want to help those Micro, Small and Medium Enterprises (MSMEs), which have been closed. My idea is to revive such sick small industries, which have closed because they have reasons beyond their control, Minister for Micro, Small and Medium Enterprise (MSME), Vayalar Ravi told in an exclusive interview to SME Times.

Excerpts of the interview...

You have assumed charge as Minister for MSME. How you see this ministry and what are your future plans?
Vayalar Ravi: Micro small and medium enterprises (MSMEs) ministry is the one of the most labor-oriented ministry, which can create more jobs, contributing significantly towards the economic growth of the country. Khadi and Coir are the major industries, which can offer more self employment, exports and skill development. And so our Prime Minister has allocated Rs. 123800 lakh for In the current fiscal under the Prime Minister's Employment Generation Programme (PMEGP) for this sector.

Tell more about PMEGP scheme and the allocated funds.
Vayalar Ravi: PMEGP is a credit-linked subsidy programme to provide margin money assistance to beneficiaries in setting up micro- enterprises in the non-farm sector. General category beneficiaries can avail of margin money subsidy of 25 percent of the project cost in rural areas and 15 percent in urban areas. For beneficiaries belonging to special categories such as SC/ ST/ women, the margin money subsidy is 35 percent in rural areas and 25 percent in urban areas. The beneficiary's own contribution is 10 percent in general category and 5 percent in special categories. Rest of the cost of the project is made available in the form of loan from Banks.

A total sum of Rs. 123800 lakh for FY12-13 has been allocated for MSMEs under the scheme. And up to July 31, 2012, out of that Rs. 63014.29 lakh has been released. In the last fiscal (FY 2011-12), 54841 MSMEs, across the nation, got financial assistance under the scheme. A total sum of Rs. 101022.92 lakh were released to the 54841 beneficiaries who have been provided margin money assistance under PMEGP in the financial year 2011-12. So I am discussing with my secretary for the utilisation of that given money and creating more jobs.

Every year many MSMEs are closing their operation. What your ministry is doing in this direction?
Vayalar Ravi: I already said that as on March 31, 2007, about five lakh of MSMEs in the country have been closed their operations due to financial crisis or some other problem. My idea is to revive such small industries, which have closed because they have reasons beyond their control. So we want to help them. I think MSMEs can do a very good job and we want to give more visibility of my ministry's activity. Then only MSMEs will know what they are doing and what they will get from the ministry to have their own employment programme. That's is why we are discussing how to give more visibility to the sector, and have found that through seminars, B2B expos and trade event we can give more visibility to the sector. So, we are planning for that.

Inadequate access to credit is a major problem that the sector is facing for a long time. Generally, such enterprises operate on tight budgets, often financed through owner's own contribution, loans from friends and relatives and some bank credit. As a result, they have to depend largely on internal resources. Your assessment on this.
Vayalar Ravi: It may be . . . . I don't now exactly . . . . I told my officers to look into the issue. Definitely we will do more in this direction. We have plans to ensure easy credit flow for the sector.

MSME sector seeks a panel to monitor adequate credit flow as suggested by the Reserve Bank of India (RBI) time and again. What is your take on that?
Vayalar Ravi: Yes . . . that idea is also under consideration. Non-availability of credit is and was a big issue for MSMEs. Our government is constantly working on that. The existing MSMEs are facing the crisis because of slow credit flow and they find it difficult to run their business. So we will make them (MSMEs) more powerful by helping them. And at the same time, provoke them to retain the market.

After government's decision to allow 100 percent foreign direct investment (FDI) in single-brand retail, Swedish furniture major IKEA is asking for relaxation in norms like changing the definition of MSME. IKEA is raising the issue that once it starts sourcing from an SME, the profit and size of the SME might grow rapidly, and as a result it might fall outside the present definition of SME, taking away the benefits given to the sector under a range of government schemes. What is your said on that?
Vayalar Ravi: I am against giving any relaxation to them (IKEA), without knowing the facts. If I feel that their need is genuine, I will. But if giving any relaxation to foreign firms affects my people and industry, I won't accept. I have to protect my industry. They need not worry that our SMEs will not remain SMEs. Over a period of time, others will come over as SMEs. Our industry is not stagnant. There are not just 10 companies. When that 10 will go, other 10 will come. This is not Europe, this is India. Government has issued an order and they should obey it.

Thank you Sir.