'Make in India' to transform MSMEs' fortunes: Minister

Kalraj Mishra, the Union minister for micro, small and medium enterprises (MSMEs), has said that the government’s “Make in India” initiative and its emphasis on increasing the share of manufacturing in the gross domestic product (GDP) from the present 14-15 per cent to 25 per cent by 2022 has the potential to transform the fortunes of the MSME sector, enabling it to scale hitherto unheard-of heights.

The minister was speaking at a symposium on ‘Growth and Prospects of MSME Sector in the Emerging Scenario’, organised by the National Institute for Entrepreneurship and Small Business Development (NIESBUD) in collaboration with the Confederation for Indian Industry (CII) in Delhi on January 8.

According to the ministry, the Centre's “Make in India” campaign to get Indian companies and global firms to invest and partner in the manufacturing sector is highly relevant for India’s MSMEs.

The ministry expects four of its ongoing initiatives to play key roles in ensuring the campaign’s success -- the public procurement policy, the micro and small enterprises (MSE) cluster development programme (MSE-CDP), the Prime Minister’s Employment Generation Programme (PMEGP) and skill development.

The Centre has notified the Public Procurement Policy for MSEs, which mandates that all Central ministries, departments and public sector undertakings (CPSUs) must procure a minimum of 20 per cent of their annual requirement of goods and services (by value) from MSEs. A sub-target of four per cent of this 20 per cent must be procured from MSEs owned by SC/ST entrepreneurs.

The policy will become mandatory from April 1, 2015, but in 2013-14, 37 CPSUs procured more than 20 per cent from MSEs. In 2013-14, 56 CPSUs organised 1,007 vendor development programmes (VDPs) for MSEs. In 2014-15, the target is over 55 national VDPs and 351 state VDPs across the country, to develop MSE vendors with a budget allocation of Rs 5 crore.

The cluster approach entails soft interventions (such as diagnostic study, capacity building, marketing development, export promotion, skill development, technology upgradation, workshops, seminars, training and study visits), hard interventions (setting up of common facility centres) and infrastructure upgradation in existing MSE clusters.

A total of 848 interventions in various clusters spread over 28 states and one UT in country have been undertaken for diagnostic study, soft and hard interventions. By November 30, 2014, Rs 41.50 crore had been issued during the current financial year under MSE-CDP.

The PMEGP, a national-level credit-linked subsidy scheme, was introduced in August 2008 with the aim of creating an estimated 37.38 lakh additional jobs during the four remaining years of the Eleventh Plan (2008-09 to 2011-12). Between 2008-09 and 2013-14, 2.48 lakh units were assisted with margin money subsidy of Rs 4,745.15 crore to create jobs for 22.29 lakh persons.  

Under this programme, financial assistance is provided for setting up micro enterprises each costing up to Rs 10 lakh in the service sector and Rs 25 lakh in the manufacturing sector. A subsidy of up to 25 per cent of the project cost is provided in rural areas, and 15 per cent in urban areas.

Finally, the MSME ministry is engaged in enhancing the training capabilities of tool rooms, MSME Development Institutes and other organisations under it. The training programmes range from traditional rural industries to high-end, high-tech programmes on CNC machines. Programmes for skill development were conducted for nearly 5.51 lakh trainees in 2013-14 and the target for 2014-15 is 5.20 lakh persons.