Govt panel to suggest easier entry, exit norms for MSME growth

Govt has set up an IMC headed by the MSME Secretary, to look into issues faced by small units

To improve manufacturing in MSME sector, a government-panel is soon likely to suggest easier entry and exit norms along with easy flow of credit in its report to Cabinet Secretary Ajit Kumar Seth.

"We are finalising our report on improving manufacturing in the Micro, Small and Medium Enterprises (MSMEs) sector which will soon be submitted to the Cabinet Secretary for his consideration," MSME Secretary Madhav Lal told PTI.

The government had set up an inter-ministerial committee (IMC), headed by the MSME Secretary, to look into issues faced by small units and suggest ways to boost manufacturing in the sector.

Besides Lal, other members of the IMC include Secretary in the Ministry of Labour M Sarangi, Textiles Secretary Zohra Chatterji and Department of Industrial Policy and Promotion (DIPP) Secretary Saurabh Chandra.

The country' manufacturing sector, which constitutes over 75% of the Index of Industrial Production (IIP), contracted 2.2% in June compared with a 3.2% drop a year earlier.

The six-member committee has discussed a number of issues which have been affecting the growth of small units and would suggest various recommendations in this regard.

In the report, the panel is believed to have suggested simplification of rules for entry of small units along with creating an efficient framework for exit of sick units.

"We are looking at the entire issue from the perspective of the life cycle of MSMEs like what kind of assistance they require at the stage of the start-up and what is that they require for doing business or expanding it," Lal said.

Currently, there is also a fear factor among those entrepreneurs who run unviable units and want to exit as the existing insolvency laws do not support them.

Besides, the panel may recommend easy access to credit, better labour laws, improved infrastructure and effective marketing techniques for the sector which will help in improving manufacturing activities.

The sector has been witnessing a slow growth phase with its share of exports falling from 40% to 36% lately.

However, the ministry expects that the trend would change if necessary steps are initiated. The share of MSMEs is targeted to increase up to 50% in country's total exports during the 12th Plan.

The MSME sector employs over 60 million people in about 2.61 crore units and contributes about 45% to the manufacturing activities.