Small Size, Big Change

The Economic Times - - Power Of Ideas -

le­gal and tax frame­work has to be put in place, if the new govern­ment wants to at­tract in­vest­ments to MSMEs.

De­spite be­ing crit­i­cal to the econ­omy MSMEs cur­rently face sig­nif­i­cant chal­lenges. The key chal­lenge is the avail­abil­ity of ad­e­quate and timely fi­nance. The need for col­lat­er­als, high in­ter­est rates, long lead times and the lack of fi­nan­cial in­for­ma­tion are just some of the chal­lenges that small en­ter­prises face in their ef­fort to ac­cess fi­nance. Limited ac­cess to in­fra­struc­ture such as power, wa­ter and roads cou­pled with red-tape fur­ther add to their woes as it in­creases op­er­a­tional costs ren­der­ing MSMEs un­com­pet­i­tive.

Small en­ter­prises also have to con­tend with the risk of tech­no­log­i­cal ob­so­les­cence as they are un­able to adopt newer tech­nolo­gies at a rapid rate. In the short term, pol­icy ini­tia­tives and in­cen­tives by the govern­ment to pro­mote do­mes­tic man­u­fac­tur­ing can deliver quick and sig­nif­i­cant re­sults. Take the ex­am­ple of set-top boxes which is a small sub-seg­ment of elec­tron­ics hard­ware in­dus­try but is the third largest im­port item af­ter oil and gold. If lo­cally man­u­fac­tured, this in­dus­try can help gen­er­ate more than 15,000 jobs.

Cut­ting across sec­tors, prod­ucts and ser­vices, mi­cro, small and medium en­ter­prises are truly a strate­gic as­set for the econ­omy and thus it is im­per­a­tive for the new govern­ment to fo­cus on MSMEs to achieve over­all growth ob­jec­tives.

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