The Narendra Modi Government is actively considering revising the investment caps for micro, small and medium enterprises (MSMEs), and can soon work out a system to implement government programs for the sector through accredited industry associations.
MSME Secretary Madhav Lal said the government was looking to revise the caps on investment limits for the MSME sector.
“We have received several representations about the revision of investment limits...some have even argued for including other factors besides capital,” Mr. Lal told The Hindu on the sidelines of the seventh national cluster summit, organised by the Confederation of Indian Industry (CII) here on Wednesday.
The current investment caps, defined by the Micro, Small & Medium Enterprises Development (MSMED) Act, 2006, stand at Rs.25 lakh for micro; more than Rs.25 lakh to Rs.5 crore for small; and over Rs.5 crore to Rs.10 crore for medium enterprises in the manufacturing sector. For MSMEs in the services sector, these limits are less than Rs.10 lakh, over Rs.10 lakh to Rs.2 crore and over Rs.2 crore to Rs.5 crore, respectively.
“However, any such move can only be brought about by amending the MSMED Act,” said Mr. Lal.
He also said the Ministry, based on its experiences with accredited industry associations, could work out a system to implement government schemes for the sector through these associations.
In August, the Ministry, in partnership with the Quality Council of India and Deutsche Gesellsschaft fur Internationale Zusammenarbeit (GIZ), had launched an accreditation system for industry associations and business membership organisations (BMOs)
Mr. Lal said the MSMEs would play a major role in Mr. Modi’s flagship ‘Make in India’ initiative.
“MSMEs are already contributing 8 per cent to the manufacturing GDP, 45 per cent to manufacturing output, 40 per cent to exports...but we have to improve competitiveness of the entire manufacturing and value chain of the sector,” he said.
“That’s why we are looking to strengthen professional relationships in this sector (using the accreditation system). If an association is capable of supporting its members then many government programs could be routed through these associations,” he said.
Mr. Lal said lessons from China, if any, would have to be tweaked according to local conditions.
“It is important to focus on the value addition component and not just on expansion of manufacturing base because they have a lot of opportunities in the global market and hence will face challenges of innovation, efficiency of business models and the like,” he said.
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