PM to oversee policy guidelines for MSME sector

Prime Minister Manmohan Singh today set up a council under his chairmanship to lay down broad policy guidelines and review the development of small and medium enterprises (MSMEs) which employ 6 crore people.

Other members of the council include Finance Minister Prananb Mukherjee, MSME Minister Dinsha Patel and Planning Commission Deputy Chairman Montek Singh Ahluwalia, MSMEs Secretary Dinesh Rai said today.

Rai said the Cabinet is likely to clear by June 15 a policy that may make it binding on government departments and PSUs to source at least 20 per cent of their purchases from small units. "I think the Cabinet approval will come by the end of the first fortnight of the next month," Rai said.

He said the policy has got clearance from most of the departments, including the Railways and Defence. "A public procurement policy for medium and small enterprises, as envisaged in the MSMED Act of 2006 may be introduced which may mandate government departments and PSUs to reach, in a stipulated period, a target of at least 20 per cent of their annual volume of purchases from them," he said, addressing meeting of the state industry ministers.

A high-level taskforce appointed by the Prime Minister had made several recommendations to help the sector. These included improving credit availability, extending help in marketing, labour, rehabilitation and exit policy, taxation issues and skill development. The taskforce had also recommended special packages for the Northeast and J&K.

According to the latest government data, there are 2.6 crore MSME units in the country out of which 1.86 crore are in the services sector.

MSME Minister Dinsha Patel said the suggestion of the taskforce on land, labour, infrastructure, revival of sick units and raw material could be implemented with the coordination between the Centre and the states.

Prime Minister's Principal Secretary TKA Nair in his address also said the states have a crucial role in implementation of a taskforce report. Nair, who heads the steering group that monitors implementations of the recommendations of the taskforce report, asked the states to transmit the data on the progress on the ground of different schemes to the Centre as the earliest.

The taskforce, formed last September, submitted the report to the Prime Minister this January with 87 suggestions of which 22 have already been implemented, Rai said.

The MSME sector, which was hit-hard due to the recent global financial meltdown, contributes 8 per cent to GDP, 45 per cent of the manufactured output and 40 per cent of exports.