10-point agenda for MSMEs in 2009

Ramesh Datla, Chairman, CII National MSME Council.

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Yearender - 2008
By Ramesh Datla

The need of the hour is to achieve incremental and Innovative improvements for the growth & development of the MSMEs in India, to ensure that our MSMEs are globally competitive. The key priority for the CII National MSME council for the year 2008-09, is to meet the expectations of its 80% strong membership base from this sector, through a structured approach focusing on issues that include Environment, Finance, Regulatory framework, Capacity building, HR and Energy conservation.

Carrying forward the last year’s theme (Building MSMEs, Building India), the CII SME agenda, hence forth would be guided by the India@75, a vision statement by C K Prahalad, Paul and Ruth McCracken Distinguished University Professor, Ross School of Business, University of Michigan. This would mean an alignment of the CII MSME Agenda with the vision for India@75 - with largest pool of technically trained manpower in the world, home to atleast 30 of the Fortune 100 firms, account for 10% of global trade, as a source of global innovations, flowering of arts, science and literature and a global benchmark on how to cope with diversity.

In India, MSME sector accounts for 40% of exports, 45% of the industrial production and contribute 8% to the GDP. The future key enablers/priorities, that CII National MSME Council would focus upon, would be –

1. Launch of Visionary SMEs programme on breakthrough and innovation in September 2008, under the guidance of Prof Shoji Shiba, targeting about 800 SMEs over a period of 4 years with 80 to come up as the future ‘Honda’s’ and Toyota’s.

2. Establishment of the SME exchange to create an effective markets for raising of equity funds by the SME sector located in remote parts of the country, especially by those which are excellent in performance, but need infusion of fresh capital (mainly in the range of Rs. 4 - 40 crore and upwards) for expansion of business. CII submits that there is need for an SME Exchange, which can enable such SMEs to raise small capital from public. This would provde an exit route to the investors such as the Venture Capitalists & facilitate the growth of the MSMEs.

3. Promotion of Climate Friendly Energy Technologies is important to enhance the self-reliance on energy and also be responsible towards the environment. CII strongly feels that there is a need to create Central Climate Friendly Technology Fund to help MSMEs to adopt Climate Friendly technologies.

4. Implementation of the MSMED Act at state levels, in close cooperation with the Central, State Governments & local bodies. Simultaneously, there is also a need for a reduction in the number of litigations through simplification of fiscal & operational regulatory framework for the MSMEs.

5. The Indian diaspora is an important source of Foreign Direct Investment (FDI) in the SMEs, therefore there is a need for Single window of information, maintenance of comprehensive statistics on all FDI in SME sector, and policy guidelines to encourage FDI participation by NRIs in the SME sector – this would include no export obligation, continuing SSI status even if FDI is more than 24%, separate platform for facilitation, automatic approval for 100% FDI from NRIs, and other promotional measures.

6. Information & Communication Technology (ICT) should be promoted among MSMEs, Cluster interventions through the various CII Centres for Excellence would be undertaken to address issues related to the internal efficiency and productivity of MSMEs, through IT applications.

To improve IT consumption in the SMEs it is recommended that the Government considers according 100% depreciation, once in a block of three financial years, for an annual investment in IT equipment and software up to a limit of Rupees Twenty Five Lakhs, to the MSMEs

7. To enhance the competitiveness and linkages with the large industry for the MSMEs, capacity building assumes priority. CII through its L M Thapar Centre for Competitiveness for the SMEs would work upon launching 5 lean manufacturing clusters impacting 50 MSMEs and also take the number of clusters from 133 to 150. CII would also supplement this effort with the establishment of an Academy of Counsellors, with support from the National Skill development programme.

8. The enactment of the Limited Liability Partnership (LLP) Act will limit the liability of the partners to their equity contribution as well as facilitate bringing in external equity participation for the MSMEs.

9. To identify and recognize MSMEs that have excelled on a broader horizon of business performance and to integrate them with the Global Value Chains (GVCs), CII would institutionalize SME Excellence Awards in partnership with GE. This would help in showcasing the highest level of performance set / achieved by SMEs in India, which can serve as benchmark for others within and outside industry sector.

10. To share & disseminate information, implement a state of art virtual market place in a holistic eco-system where SMEs and their supporting institutions would participate for problem solving, share best practices and facilitate B to B and B to C activities for MSMEs. CII proposes to launch this unique MSME portal within this year.

Note: The author, Ramesh Datla, is the Chairman of CII National MSME Council.

The views expressed by the author in this feature are entirely his own and do not necessarily reflect the views of SME Times.