Technology up-gradation a key enabler for MSMEs: Shripad Yesso Naik

Technology up-gradation is a big concern for MSMEs, which find it difficult to adopt latest technology to compete with rest of the world. The awareness and affordability of Information and communication technology (ICT) tools is relatively low, said Shripad Yesso Naik, Minister of State for Health and Family Welfare.

In an event organised by ASSOCHAM, Shripad Yesso Naik highlighted that the government has been striving to provide a sustainable platform to MSMEs to grow and develop in terms of productivity, better availability to finance, wider product range, world class marketing strategies and international competitiveness.

He said, "working capital management is a segment where ample amount of attention should be given by the small entrepreneurs. Ineffective working capital management causes the sickness amongst the MSMEs."

"Moreover, payment delays by corporations raise the transaction cost of MSMEs, which eventually bring these to verge of sickness. So, therefore it is important for MSMEs to adopt the working capital management effectively," Naik added.

It is well known that MSMEs have been lagging behind because of lack of financial assistance but the scenario is changing since financial institutions have been focusing towards the sector. Banks have established the dedicated cells & braches to cater the needs of this segment. MSMEs should get the credit rating from the reliable and trust worthy credit rating agencies, said the Minister.

The government is committed to provide all possible support to promote and encourage the MSMEs in the country. The primary responsibility of promotion and development of MSMEs is one of the state governments. However, the government of India, supplements the efforts of the state governments through various initiatives.

V Srinivasan, business head, SME Ratings, CRISIL said, "the time has come for concerted efforts by the government, financial institutions and other stakeholders to improve the financial inclusion of micro enterprises by not just formulating the right policies and processes, but also ensuring relentless implementation. What also needs to be enhanced is the soft power potential of the sector to propagate financial literacy, awareness of government schemes and benefits, and technological skills."

MSEs, together with medium-sized enterprises, form the backbone of Indian industry, employing nearly 80 million people, the most after agriculture. In the study sample of micro enterprises, the average number of employees per enterprise with less than Rs. 0.5 crore turn-over was 17, compared with 20 for an enterprise with turnover Rs 0.5-1 crore and it points to the large scope for employment in the sector.

It has been wonderful of late to see the sector driving innovation and process/product development in this age of e-commerce. Yet, MSEs tend to be overlooked by institutional finance, for reasons such as information asymmetry, lack of awareness and adequate financial infrastructure, adds the joint study.