01/07/2021 - Indian Economy | Mainstorming

IAS Parliament 3 years

KEY POINTS

· Since MSMEs are not registered separately under statutes such as the Companies Act, there is no mechanism to distinguish them from other corporate entities.

· With Atmanirbhar Bharat, the Centre has taken several step. It has also launched the MSME Udyam portal for registration, though this is not mandatory.

Issues that need attention

· A primary one is the regulatory framework for SMEs that prevents a growth-oriented mindset.

· The concessions awarded to SMEs in terms of tax-breaks and low interest rates must be extended.

· Credit access to SMEs as well as the mechanism to seek payment from buyers needs bettering to ensure financially viable.

· The present redressal system on recovery of payments, may discourage SMEs from pursuing formal action against defaulters.

· Priority ought to be given to scaling up economies with state support.

Manufacturing base

· SMEs also account for a third of India’s GDP, 45% of manufacturing output and 48% of exports and hence are crucial to manufacturing and export competitiveness.

· SMEs will be vital in absorbing a significant proportion of the 600 million entrants to the labour market in EMEs by 2030.

· Rural areas account for 45%, while the remaining are in urban areas. Hence, SMEs are well-poised to address poverty in both the cities and villages.