E-tools can help MSMEs to market their products: Economic Survey

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Saurabh Gupta | 03 Jul, 2009
Micro, small and medium enterprises (MSMEs) account for 40 percent of India's exports, but there's still no electronic database or service to market their products, the Economic Survey said on Thursday.

The micro and small enterprises (MSEs) provide employment to an estimated 31.2 million
persons in the rural and urban areas of the country.

During 2003-07, the MSE sector registered continuous growth in the number of enterprises,
production, employment and exports. It is estimated that there are about 128.44 lakh MSEs in the country as on March 31, 2007, accounting for about 39 percent of the gross value of output in the manufacturing sector.

It is understood that the MSMEs have been affected due to the global downturn but the impact on the sector has not been assessed, the Economic Survey said.

"While it is desirable to assess performance of the MSMEs against the recent developments (global downturn), limitations of data may not permit doing so," it noted.

To capture the data for the MSME sector, the 4th Census of MSME sector is being launched. It will create a database for the sector and provide a frame for tracking the future growth and development of the sector.

It has suggested creation of an internet enabled data and information system to help the units market their goods and services across India and the world.

Facing demand slowdown in global markets, entrepreneurs in the MSME sector are also complaining of lack of credit availability at affordable rate of interest.

Earlier, MSME Minister Dinsha Patel had said that the government would address the credit needs of the sectors, while a separate fund for enterprises in the unorganised sector was also in the pipeline.

To make the Credit Guarantee Scheme more attractive, the following modifications have been made in the Economic Survey:
(a) enhancing eligible loan limit from Rs. 25 lakh to Rs. 50 lakh;
(b) raising the extent of guarantee cover from 75 percent to 80 percent for (1) micro enterprises for loans up to Rs. 5 lakh, (2) MSEs operated or owned by women and (3) all loans in the North-East Region; and
(c) reducing one-time guarantee fee from 1.5 percent to 0.75 percent for all loans in the North-East Region.

Meanwhile the survey has indicated that it will further prune the list of items reserved for the MSME sector.

The Economic Survery says that the phased deletion of products from the list of items reserved for exclusive manufacture by micro and small enterprises is being continued. On March 13, 2007, 125 items were dereserved reducing the number of items reserved for exclusive manufacture in micro and small enterprise sector to 114. Further, 79 items were dereserved through a notification dated February 5, 2008.

Employing 42 million people, the the sector contributes about 45 percent to the country's industrial output.