Better days ahead for MSME sector: industry surveys

Small is beautiful. So is a micro and medium business enterprise.

There are 26 million of them creating 60 million jobs and contributing 45 per cent to India's industrial production. Their contribution to the country's exports of $185 billion is 40 per cent.

After a bad year due to demand recession in the west, things are changing for better, an industry outlook survey has found.

As many as 56 per cent of MSMEs polled in a CII survey believed that their exports would rise in the second half of the current fiscal.

However, "rising cost of raw material, international competition, price competitiveness and delay in payments" would be the limiting factors for their export growth, it said.

Assocham felt these units can "emerge as the epicenter of increased economic activities from 2010 onward, provided the government sources 10 per cent of its requirement from the sector".

It also wants easing of bank rates for MSMEs. "...Commercial banks need to relax interest rates for the MSMEs," Assocham said.

A high level task force headed by Prime Minister's Principal Secretary T K A Nair is finalising a report, which is believed to have recommended relaxation of banking norms for the MSMEs.

The panel has also suggested that the Public Sector Units (PSUs) procure 20 per cent of their requirements from the micro, small and medium units.

Exports, which constitute about 17-18 per cent of India's Gross Domestic Product (GDP) have been facing difficult time since October, 2008 as recession had set in the US and Europe.

Consignments from the country dropped 26 per cent between April-October period. Exporters, mostly in the small scale sector, suffered the most in terms of losing orders and financial crunch.

However, the environment improved since November with exports returning into positive territory, showing over 18 per cent expansion.