Indian MSME Sector Thrives on Government Support
The Indian government's initiatives have significantly boosted the Micro, Small, and Medium Enterprises (MSME) sector. Labour reforms have cut production losses, while access to funds without collateral has been expanded. The sector's non-performing assets (NPAs) are now lower than those of larger organisations.
The government, in collaboration with the Reserve Bank of India, has disbursed approximately Rs 8 trillion in credit to MSMEs over the past three years. This has been facilitated by policies that allow access to funds without collateral, up to Rs 10 crore. These initiatives have led to a significant reduction in NPAs in the MSME sector, now at a mere 3.9%.
The Government e-Marketplace (GeM) has also played a pivotal role in empowering MSMEs. It has focused on sustainability and has positively impacted the sector. Moreover, state governments are relaxing land laws, making it easier for MSMEs to set up operations. This, coupled with improving interstate competition, is enhancing the ease of doing business for MSMEs.
The Federation of Indian Chambers of Commerce and Industry (FICCI) and the Confederation of Medium and Small-Scale Industries (CMSME) are working together with the government to organise outreach programs. These programs aim to educate MSMEs about the policies and schemes available to them. This has resulted in almost 45% of public procurement being done through MSMEs.
The Indian government's efforts to support the MSME sector have shown promising results. With improved access to funds, reduced NPAs, and increased public procurement, the sector is thriving. The relaxation of land laws and the focus on sustainability through initiatives like the Government e-Marketplace are further boosting the sector's growth.