On November 2, 2018, Prime Minister Narendra Modi launched the MSME Support and Outreach Programme and unveiled several initiatives to enhance credit access and boost employment for MSMEs.
The programme is set to run for 100 days and cover 100 districts in the country, according to media reports.
PM Modi noted that after agriculture, MSMEs were the biggest job providers. “If agriculture is the backbone of India's economy, then MSMEs are taking the economy to newer heights,” he added.
At the event, PM Modi launched a portal where small enterprises can avail loans of up to Rs 1 crore in just 59 minutes, and also unveiled several other initiatives.
At the outset, the initiative might look like a step in the right direction for boosting the MSME sector, but what do the intended benefactors of the scheme think?
SMBStory had a chat with MSME entrepreneurs from all around the country to probe deeper into the on-ground reality.
Sundeep Mohindru, CEO, M1xchange (an RBI-approved TReDS platform supporting MSMEs to generate cash flow), said, "the government’s strong stance in support of TReDS platform augurs well for the MSMEs. The government’s push to make onboarding of CPSUs and corporates compulsory on TReDS platform will go a long way in easing the cash cycle for MSMEs.” He added: “The offer by the PM to supervise implementation in the next 100 days will change the way India does business.”
Gaurav Agrawal, Founder, G-tech Print Works, Mathura, said, “Even before the new initiatives, there were many schemes for MSMEs. Unfortunately, availing the benefits of these schemes is difficult for those in need.”
According to him, translating the scheme into on-ground action will be a challenge. “Therefore, considering my experiences, I am going to wait and watch. Although the initiatives seem very appealing, success depends on how well they are executed.”
Kerala-based B. Jaykrishnan, Owner, Director, Toyo Rubbers, is glad that his Idukki district is covered under the scope of the support programme. “Almost 80 percent of our members from our associations are happy with the policy. The success of this scheme is in the hands of the government and other officials,” he said. “Banks should let go of their negative attitude to the MSME sector, especially in Kerala.”
Sumit Jaiswal, Founder, Highflow Industries, Faizabad, echoes Gaurav’s sentiments. “The 59-minute loan scheme is too fast. I doubt that 59 minutes is sufficient to do a complete background check of the business,” he said. “After all, it's the taxpayers' money which the government is giving to MSMEs as a loan.”
Kanpur-based entrepreneurs Prerna Verma and Shalini Mehrotra are also taking the announcements with a pinch of salt. “I do not doubt the intentions of the government here. They are for the betterment of this sector. But I am just a little worried about the implementation of the policy by the concerned authorities and institutions. I hope that the government officials will be active in implementing the policies to make the scheme functional,” said Prerna, Founder, Creative India.
Shalini, Founder, Style Inn Boutique, adds: “I hope that it helps, but the real small and medium businesses like us, which are bootstrapped and starve for financial help, never get any response from the government and the general public unless we have sources everywhere.” She maintains that bigger investors and businessmen can easily secure these loans.
Thejaswi S, Founder, Koko Boost Nutrition, Bengaluru, has also identified a problem. “We welcome the decision, but it is sad for newer MSMEs like us because this outreach programme is only for startups which are at least three years old. New MSMEs will still struggle,” she explained. “We hope the programme can benefit new startups with immediate effect.”
However, Prateek Gupta, Founder, SNA Milk & Milk Products, Pune, is optimistic. For him, the most important part of the initiative is the reform that the government will take on the Companies Act. “Most entrepreneurs, including myself, are completely focussed on our business objectives. We often miss out on a few legal matters, which might bring us in trouble,” he explained. “However, I would like to hail the government on their continuous efforts for making India a better place to do business.”
Sujayraj KB, Founder, Ele Farm Hub, Bengaluru, is also positive. He said, “With the reduced cost of credit, low GST, and without the scrutiny of courts, it is a welcome change for us.” Also from Bengaluru, Devang Desai, Owner, India Trading, said, “I welcome the initiatives taken by our Prime Minister to boost the MSME sector. I particularly appreciate the creation of the technology hubs for MSMEs. However, more needs to be done in the handmade jewellery and handicrafts sector.”
Xavier Thomas Kondody, Founder, Sanson Chemical Industries, and Former State President of Kerala State Small Industries Association, is thankful for the initiatives, which he believes can create a robust ecosystem for the sector. “To execute this, we also urge the various central and state departments and commercial banks to frame the adequate rules and procedures for the latest reforms,” he said. “They also need to spread awareness campaigns among the industry associations and all stakeholders.”
An an extra measure, the government invited suggestions from trade bodies and their members on solving global and local challenges in SME development, according to sources. With the objective to develop a list of priority recommendations for the government, the focus areas are the enabling environment, capacity development, and finance for SMEs.
(With inputs from Vatsla Srivastava)