There is a huge scope for improving the competitiveness of Indian Micro, Small and Medium Enterprise (MSME) sector, said Shaktikanta Das, Reserve Bank of India (RBI) governor.
At the 15th Annual Banking Summit held at Hotel Taj Mahal Palace, Colaba, Mumbai, Shaktikanta said, “The challenges in the MSME sector is confined to infrastructure bottlenecks, absence of formalisation, some inertia to technology adoption, capacity building, backward and forward leakages, lack of access to credit and risk capital and perennial problem of delayed payments by large corporates, which naturally effects the business cycle of the MSMEs.”
“Players in the MSME sector need to do quite a bit with regard to improving their competitiveness by adopting new technologies, accepting e-payments, and try and foster inhouse innovation and inhouse product quality improvement. They should also I feel try and expand in size and reduce the dependence on the incentives structure,” he further added.
Niranjan Hiranandani, President, ASSOCHAM said, “The time is right for Indian Banking system to be resurrected out of its Cancer ailment. The economic data is flashing warning signs and pressing alarming bells to rejig and redesign sickening banking structure. The overhanging distressed loans need a cleaning spree with the fresh fiscal stimulus to pump in desired liquidity and relive the choked banking sector. Fresh borrowing and lending to the priority and labour intensive sector is crucial to recoup financial growth.”
The economic data is flashing warning signs and pressing alarming bells to rejig and redesign sickening banking structure. The overhanging distressed loans need a cleaning spree with the fresh fiscal stimulus to pump in desired liquidity and relive the choked banking sector. Fresh borrowing and lending to the priority and labour intensive sector is crucial to recoup financial growth,” he added.
According to government data of 2016-17, MSMEs contribute 30 percent in nominal GDP with 6.3 crore units established across the country. Also, it employed around 11 crore people until 2015-16. Further, 50 per cent of them are set up in rural areas, contributing 45 per cent to employment opportunities there. Besides, all three sectors of MSMEs (trade, manufacturing and other services) account for one-third of the total employment in the country. Moreover, exports by MSMEs stood at 48 per cent in 2018-19. Overall, they have great growth potential and the government needs to tap the opportunities timely.