'Govt purchase from MSMEs to touch Rs 1,60,000 cr in FY11'

Micro, Small and Medium Enterprises (MSMEs) are in for a windfall, as the government purchase from the sector would touch almost Rs 1,60,000 crore during 2010-11.

According to the recommendation of a high-level MSME Task Force constituted by Prime Minister Manmohan Singh, the Centre will reserve 20 per cent for MSME manufactured items for procurement by the government.

At present, the government purchase from MSME sector is around Rs 40,000 crore, of the estimated total procurement of Rs 6,00,000-7,00,000 crore annually, which is less than 7 per cent.

Since, the government purchase is growing at an annual rate of 10-15 per cent, it is likely to reach Rs 8,00,000 crore next fiscal and 20 per cent reservation would mean Rs 1,60,000 crore.

In a recent workshop organised by MSME chamber Indian Industries Association (IIA), National Small Industries Corporation (NSIC) chairman H P Kumar emphasised the next decade belonged to MSMEs, who were the drivers of the Indian economy.

“Over the years, much has been done by and for MSMEs and one important development was the constitution of the MSME task force,” he noted.

Union Finance Minister Pranab Mukherjee, in his Budget speech, had announced the implementation of the recommendations of the task force. The recommendations also include easy credit and market support to the beleaguered sector recovering from the aftermath of the slowdown.

Kumar said NSIC had played a major role in the likely implementation of the task force recommendations, such as facilitating tenders, flow of bank finance, raw material availability etc.

“The main bottleneck for the sector is the non-availability of finance, which NSIC is now equipped to facilitate as we have entered into agreement with 10 banks for facilitating bank finance for micro and small enterprises (MSE) and processing their applications without any charge,” he informed