Govt may okay Rs 300 cr for marketing support to MSMEs

The government is likely to approve tomorrow a Rs 300-crore initiative for providing marketing support to micro-small and medium enterprises (MSMEs), which are facing tough times in the face of industrial slowdown amid rising interest rates.

The proposal which envisages strengthening of the National Small Industries Corporation (NSIC) by equity infusion of Rs 300 crore, is expected to be placed before the Union Cabinet, sources said.

They said the initiative was one of the recommendations of the Prime Minister's Task Force on MSMEs that had finalised its report in January, 2010.

One of the recommendations of the PM's Task Force was to "strengthen NSIC's equity base for enhanced market support to MSMEs".

It had also suggested several other ways to help the MSME sector, which contributes 45% of the manufacturing and 40% of the country's exports. The MSMEs with 26 million units is highly job-oriented providing employment to 60 million people.

The problems identified by the PM's Task Force also included lack of adequate and timely credit with high cost, limited access to equity capital,problems in supply to government departments and agencies and procurement of raw materials at a competitive cost.

The MSME sector has been impacted by the tight monetary policy by the RBI as also slowdown in domestic and export demand.