The Consortium of Indian Associations (CIA) has proposed the establishment of an independent ministry for self-employed and microenterprises to address sector-specific issues.
Why is there a need for a new Ministry?
- Microentrepreneurs are still subject to complicated and outdated laws, as well as unnecessary compliance burdens.
- Despite government efforts, MSMEs in India face a number of challenges, including access to finance, a shortage of skilled labour, and inadequate infrastructure.
- The new ministry may aid in the provision of various types of government assistance and benefits, such as credit, subsidies, and tax exemptions.
Microenterprises
- Microenterprises are small businesses with a small number of employees, few assets, and low annual turnover or revenue.
- The terms “microenterprise,” “microbusiness,” and “microfirm” are frequently used interchangeably.
- Microbusinesses can be found in a variety of industries, including retail, manufacturing, and services.
- Small retail shops, food stalls, street vendors, small manufacturing units, and service providers such as plumbers, electricians, and small-scale service providers are examples of microenterprises.
Features of Microenterprises
- Microenterprises are the smallest type of business in general.
- They are distinguished by their low capital investment and simple manufacturing processes.
- These businesses are frequently started by entrepreneurs looking for self-employment and a way to earn a living.
Why are they significant?
- Employability: Microenterprises are an important part of many economies, particularly in developing countries, where they can provide vital employment and contribute to economic growth.
- Scale of business: By offering a variety of services, such enterprises have a huge potential for business penetration at the household and domestic levels.
Microenterprises in India
- According to the Ministry of Micro, Small, and Medium Enterprises (MSMEs), India has approximately 6.3 crore (63 million) MSMEs that employ approximately 11 crore (110 million).
- MSMEs in India are classified based on their annual turnover and investment in plant and machinery or equipment.
The following is a classification of MSMEs:
- Micro Business: Micro enterprises are the smallest type of business, with a lower investment cap than the other two categories. The investment limit for manufacturing enterprises is up to Rs. 1 crore in plant and machinery, while the investment limit for service enterprises is up to Rs. 50 lakh. The combined turnover limit for both types of businesses is Rs. 5 crore.
- Small Enterprises: Small businesses have an investment in plant and machinery or equipment ranging from Rs. 1 crore to Rs. 10 crore. The investment limit for service enterprises is between Rs. 50 lakh and Rs. 2 crore. Both types of businesses have a turnover limit of Rs. 5 crore to Rs. 50 crore.
- Medium Enterprises: Medium enterprises can invest more than small businesses. The investment limit for manufacturing enterprises is between Rs. 10 crore and Rs. 50 crore, while the investment limit for service enterprises is between Rs. 2 crore and Rs. 5 crore. Both types of businesses have a turnover limit of Rs. 50 crore to Rs. 250 crore.
Various initiatives
- The Indian government has launched several initiatives to support the growth of MSMEs in the country, including:
- Udyam Portal: The government has introduced a new registration process called Udyam Registration to make it easier for MSMEs to register and avail of various government schemes and benefits.
- Credit Guarantee Fund Scheme: The Credit Guarantee Fund Scheme allows banks and other financial institutions to make collateral-free loans to MSMEs.
- Cluster Development Programme: The government has launched the Cluster Development Programme to boost MSMEs’ competitiveness by providing infrastructure, technology, and marketing assistance.
- The National SC-ST Hub aims to promote entrepreneurship among Scheduled Castes and Scheduled Tribes by providing capacity building, market linkages, and access to finance.
- Technology Upgradation: Through various schemes such as the Technology Upgradation Fund Scheme and the Credit Linked Capital Subsidy Scheme, the government provides financial assistance to MSMEs for technology upgradation.
Way Ahead
- If the government decides to create a separate ministry for microenterprises, the following steps could be taken to ensure its effectiveness:
- Setting specific goals: This should be based on a thorough understanding of the challenges that microenterprises face as well as the opportunities that are available to them.
- Coordination with other ministries: The new ministry should work with other ministries to ensure that the policies and initiatives developed are in line with the government’s broader economic and social goals.
- Creating policies and initiatives: The ministry should create policies and initiatives that address the unique needs of Indian microenterprises, such as access to finance, technology, and markets.
- Strengthening institutional capacity: The ministry should have a strong institutional capacity to implement policies and initiatives effectively. This could entail recruiting microenterprise experts and strengthening the capacity of existing institutions.
- Creating awareness: The ministry should educate microenterprises about the resources and services available to them. This could include organising workshops and training programmes, as well as leveraging digital platforms for information dissemination.
Source: https://www.financialexpress.com/industry/sme/msme-eodb-need-for-a-separate-ministry-focusing-on-micro-enterprises-with-dedicated-policy-support-cia/2355906/