Smaller units to get a big boost

The National Small Industries Corporation proposes 20% government procurement from MSMEs

In order to boost the sales of micro, small and medium enterprises (MSMEs), the National Small Industries Corporation (NSIC) has proposed that 20 per cent of the value of the government’s annual purchases should be made from micro and small enterprises. The proposed draft rule is at the consultation stage and NSIC expects it to become a legislation within three to six months, once it is notified by the Ministry of Micro, Small & Medium Enterprises.

Speaking to Business Standard, NSIC chairman and managing director H P Kumar said, “In order to boost the MSME sector, we have framed the rules. The rules are part of the draft policy for procurement preference under Micro, Small and Medium Enterprises Development Act 2006. As per the rules Central government departments and PSUs have to make 20 per cent of their total purchases from micro units initially in three years, and later on an annual basis. Further, NSIC will certify the quality after inspection under the single point registration scheme. The rule is at the consultation stage and is likely to be notified by the Ministry of Micro, Small & Medium Enterprises within three to six months.”

Kumar was in Chandigarh recently to address a seminar on ‘NSIC Initiatives for MSMEs’, organised jointly by the PHD Chamber and NSIC. He also said the state governments will frame rules to make it mandatory for state government departments to source 20 per cent of their total purchases from MSMEs.

Indian MSMEs produce over 6,000 products and the department has classified around 358 items for exclusive purchase from micro and small enterprises. Kumar also said that micro and small enterprises registered with NSIC under its single point registration scheme will be entitled to various benefits and facilities, such as exemption from payment of earnest money and free availability of tender sets.

Commenting on the proposed draft, A L Agarwal, vice-chairman of the Haryana Chamber of Commerce and Industry, said, “This is definitely going to help Indian MSMEs. Once the rules become legislation it will give a fillip to MSMEs.” An industrialist added that early implementation of the rules was needed.

In order to enable MSMEs procure raw material shortage more easily, NSIC has been given responsibility for raw material distribution under its raw material assistance scheme. The scheme aims to help small enterprises finance the purchase of raw material, both indigenous and imported.

This gives small enterprises an opportunity to focus more on quality. NSIC has 40 raw material centres and distributes steel, aluminium and other ferrous metals across India. In order to further expand its presence and assist MSMEs, it is planning to open 10 more centres.

NSIC has already applied to Coal India to appoint it as the distributing agency for micro and small units. Responding to a request by B S Anand, president of the Mohali Industries Association, to make available non-ferrous raw material such as brass and nickel to MSMEs in the area, Kumar said NSIC is trying to add zinc, non-ferrous metals and plastics raw materials to the list of existing items.

“NSIC distributed raw material to the tune of Rs 4,300 crore last year and we look forward to having a turnover of Rs 6,000 crore this year,” he added.