BY KAMLESH TRIPATHI: FORMER GENERAL MANAGER MAHINDRA & MAHINDRA LTD, HEAD-OPERATIONS MAHINDRA SHUBH LABH SERVICES LTD., HEAD-AGRI AND ENGINES ESCORTS LTD. AND VICE PRESIDENT RELIANCE RETAIL. (WRITER AND AUTHOR)
DEFINITION OF MSME:
It would be worthwhile to first define these enterprises in accordance with the provision of Micro, Small & Medium Enterprises Development (MSMED) Act, 2006. The MSMED are classified in two classes:
(a) Manufacturing Enterprises: The enterprises engaged in manufacture or production of goods pertaining to any industry specified in the first schedule of the industries act, 1951 or employing plant and machinery in the process of value addition to the final product having a distant name or character or use. The Manufacturing is therefore defined in terms of investment in Plant & Machinery.
(b) Service Enterprises: The enterprises engaged in providing or rendering of services and are defined in terms of investment in equipment.
INVESTMENT PLATFORM OF MSME:
The limit for investment in plant and machinery/ equipment for manufacturing/ service enterprises, as notified, vide S.O. 1642(E) dtd.29-09-2006 are as under:
Enterprises Investment in plant & machinery
Micro Enterprises Does not exceed twenty five lakh rupees
Small Enterprises More than twenty five lakh rupees but does not exceed five crore rupees
Medium Enterprises More than five crore rupees but does not exceed ten crore rupees
Enterprises Investment in equipments
Micro Enterprises Does not exceed ten lakh rupees:
Medium Enterprises More than two crore rupees but does not exceed five core rupees
SOME RELEVANT STATISTICS
MSMEs contribute nearly 8 percent of the country’s GDP, 45 percent of the manufacturing output and 40 percent of exports. They provide the largest share of employment after agriculture. They are our nurseries for entrepreneurship and innovation and are widely dispersed across the country and produce a diverse range of products and services to meet the needs of the local markets, the global market and the national and international value chains. Back bone of the Indian economy, employs close to 40% of India’s workforce. Play a critical role in generating millions of jobs, especially at low-skilled level. Country’s 1.3 million MSMEs account for 40% of India’s total exports
MSME ROLE IN AUTO AND FARM MECHANIZATION
MSME has played a key role in developing the Auto and Farm sector in India. In fact big players manufacture only 30-40% in house; and rest of the components are developed by MSMEs and the pattern is similar, even abroad, as this required to be cost efficient. Apart from the manufacturer, MSMEs also manufacture for the retail spare parts markets. On a more realistic note, every, foreign collaboration is gradually indigenised; and people who generously delve in this are the MSMEs. And that goes to show they are not frugal and have the R&D capability but may lack financial muscle. And within the given business matrix they have developed many products in rural transportation, farm implements and operations and many of them have even given a good fight to products from Continent and the US. But due to lack of resources these innovators have not been unable to take their innovation to the next level and provide employment to many.
MSME REQUIRES A MORE LEVEL PLAYING FIELD:
Firstly, we need to realise, the sector that employs 40% of our workforce, and is the second largest employer after agriculture is a force to reckon with. Most of their innovations have sprung out of independent thought processes, individual initiatives and efforts; many a times referred as Jugad technology, later refined into durable PAN Indian and global products. MSMEs have evolved locally and have their ears to the ground; unlike big players who have collaborated with global players for products to adapt to Indian conditions. But both are complementary and have to co-exist rather can’t exist without each other.
And for this to happen MSME requires a more level playing field as far as their interface with the Government and big players is concerned. It is therefore imperative in all policy matters thinkers of MSME are also included to forge a more cohesive and complaint policy, taking into account limitations of MSMEs, says a medium enterprise owner who doesn’t want to be named. In the manner China has supported their MSMEs India should also follow suit. It would not be out of place to mention that we need to revisit the emission norms for Gensets, Power Tillers and engine operated irrigation pumps. Also cost and time taken for testing thwarts grass-root level innovations, and this needs to be looked into. These are some of the feedbacks received from enterprise owners who prefer to be silent.
After all when most consumer requirements are contracting to ‘compact’ versions and ‘small’ is becoming the ‘in-word’ I see no reason why MSMEs should not be invited to the applecart of industry thinkers.
Government through its hierarchy and battery of bureaucrats should ensure MSMEs don’t face any road blocks and get a voice in each forum of decision and policy making. It is a Management saying if you keep taking the same action and expect a different results you are only fooling yourself and I feel Modi Government has no intention of doing that and they would overhaul policy making committees for a fair play and encourage MSMEs offering simple frugally engineered solution to problems being faced by Agriculture, Rural Transportation and affordable and optimized transportation of agriculture produce.