'MSME sector's role crucial for manufacturing growth'

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SME Times News Bureau | 18 Mar, 2012
The Micro, Small and Medium Enterprise (MSME) sector's growth will be crucial in order to increase the sectoral share of manufacturing in the nation's GDP to 25 percent in the next decade, says a recent report.

The Report of the Working Group on MSMEs Growth for 12th Five Year Plan (2012-2017) says, "The new ambitious National Manufacturing Policy, which aims to make India a manufacturing hub and increase the sectoral share of manufacturing in GDP to 25 percent in the next decade from the present level of 15-16 percent, requires substantial support from MSME sector."

It adds that "quantum jump" in the growth rate of MSME sector is required. At present, the sector's growth is around 12-13 percent annually.

"The sector is a blend of tradition and modern, with informal sector enterprises at the bottom of ‘MSME Pyramid’. The process of liberalization and global market integration has opened up wide opportunities for the sector, as also new challenges," the report says.

The Working Group has pointed out the a number of issues that obstruct rapid growth of MSMEs; they include regulation, technology, credit & finance, orthodox marketing, skills, dated institutional framework, advocacy and empowerment, and transparency.

The experts recommend that during the 12th Plan period, modular industrial estates with plug and play facilities in the respective areas may be launched as pilot projects.

The report urges the government to provide some comfort to the sector in the form of a guarantee or by co-investment through a Government promoted venture fund. "For providing starting capital, globally angel/venture fund are the prime source of funds to the start ups," it says, adding that the venture capital fund launched by SIDBI can play major role in this regard .