Date:April 2, 2023
MSME grievance – Causes and Govt. initiative
MSMEs (Micro, Small and Medium Enterprises) are the backbone of the Indian economy, accounting for a significant portion of the country’s industrial output and employment.
The Indian government has launched numerous schemes and initiatives to promote and support MSMEs, such as Make in India, Startup India, and Stand-up India.
Despite these initiatives, MSMEs continue to face several challenges, and one of the most significant challenges is grievances related to the sector.
MSME grievances refer to complaints or issues faced by MSMEs related to various aspects of their business, such as financing, marketing, technology, infrastructure, and policy.
These grievances can arise due to a variety of reasons, such as lack of access to credit, unfair competition, inadequate infrastructure, and government policies that do not favour the MSME sector.
The government of India has recognized the importance of addressing MSME grievances and has launched several initiatives to redress them.
However, despite these efforts, MSME grievances continue to be a significant challenge for the sector.
Several factors contribute to MSME grievances. Some of the primary causes are:
Lack of access to finance:
MSMEs often find it challenging to access credit from banks and other financial institutions due to stringent eligibility criteria, high collateral requirements, and the lack of credit history.
This limits their ability to invest in new projects, upgrade technology, and expand their businesses.
MSMEs face stiff competition from larger firms that have access to more significant resources, economies of scale, and better technology.
This makes it challenging for MSMEs to compete in the market and affects their growth prospects.
MSMEs often face issues related to inadequate infrastructure, such as poor transportation, power cuts, and lack of access to basic facilities like water and sanitation.
These issues affect their productivity and ability to compete in the market.
MSMEs often face challenges related to government policies that do not favour the sector, such as complex tax structures, excessive regulations, and bureaucratic red tape.
These policies make it challenging for MSMEs to operate and compete in the market.
MSME grievances have a significant impact on the sector and the economy as a whole. Some of the key impacts are:
MSMEs that face grievances related to finance, infrastructure, or policy are at a disadvantage compared to larger firms that have access to more significant resources and economies of scale.
This affects their competitiveness in the market and limits their growth prospects.
MSMEs are significant employers, and any grievances that affect their ability to operate and grow can lead to job losses.
This, in turn, can have a cascading effect on the economy, as reduced employment opportunities can lead to reduced consumer spending and lower economic growth.
MSMEs that face grievances related to infrastructure or technology are often unable to operate at optimal capacity.
This affects their productivity and ability to meet market demand, which can lead to lost business opportunities.
The government of India has launched several initiatives to address MSME grievances and promote the sector’s growth. Some of the key initiatives are:
The government has launched the Udyam Registration portal to simplify the registration process for MSMEs. This portal allows MSMEs to register online and obtain a unique identification number, which can be used to avail of various benefits and schemes.
Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE):
The CGTMSE provides collateral-free credit to MSMEs up to a certain limit, thereby reducing the burden.
Prime Minister’s Employment Generation Programme (PMEGP):
The PMEGP aims to promote entrepreneurship by providing financial assistance for setting up new MSMEs. The program also provides training and skill development support to entrepreneurs.
National Small Industries Corporation (NSIC):
The NSIC provides support to MSMEs in areas such as technology transfer, marketing, and procurement. The corporation also offers credit support and assists MSMEs in participating in government procurement programs.
One District One Product (ODOP):
The ODOP program aims to promote traditional industries and crafts by identifying a unique product for each district and providing support for its development and marketing.
The MSME Samadhaan portal was launched by the government to provide a platform for MSMEs to file complaints and seek redressal for delayed payments from other companies.
Technology Upgradation Fund Scheme (TUFS):
The TUFS provides financial support to MSMEs for upgrading their technology and machinery.
National Manufacturing Competitiveness Programme (NMCP):
The NMCP aims to enhance the competitiveness of the manufacturing sector, including MSMEs, by providing support for technology upgradation, skill development, and infrastructure development.
While the government has launched several initiatives to address MSME grievances, there are several challenges that need to be overcome to ensure their success. Some of the primary challenges are:
Many initiatives launched by the government face challenges related to their implementation. This can be due to a lack of awareness, bureaucratic red tape, or inadequate resources.
Many initiatives launched by the government have limited reach and do not benefit all MSMEs equally. This can be due to a lack of access or inadequate information.
Inadequate monitoring and evaluation:
Many initiatives launched by the government are not adequately monitored and evaluated, which makes it difficult to assess their impact and effectiveness.
Lack of coordination:
Many initiatives launched by the government are implemented by different departments and agencies, leading to a lack of coordination and duplication of efforts.
MSMEs are crucial for the growth and development of the Indian economy. However, they continue to face several challenges related to finance, infrastructure, and policy, which need to be addressed.
The government has launched several initiatives to address MSME grievances, but there are several challenges that need to be overcome to ensure their success.
It is essential to continue to focus on addressing MSME grievances and promoting the growth and development of the sector to ensure its contribution to the economy’s overall growth and development.