MSME 2020 Outlook

The novel coronavirus wreaked havoc on the economic and health systems across the globe. We  are  in  the  midst  of  Coronavirus  disease  2019  or  Covid  19  pandemic that  has  inflicted  an unprecedented economic shock  and health  shock  across the  globe. Given the highly contagious nature of disease, the outbreak of covid 19 has led to a plague followed by increasing number of cases reported in other countries across all continents. In response to the outbreak, Government of India has taken various policy actions to contain the spread of virus such as enforcing social distancing  and  self-isolation  measures,  travel  ban  and  border  closure,  and  lockdown  of  entire country. These measures are aimed flattening the curve. Additionally, they also buy some time to prepare the country’s healthcare system to battle the pandemic at its peak. India, which has a population  of  1.3  billion  spends  about  1.6%  of  total  GDP  on  its  healthcare  infrastructure,  is unprepared with its fragile and tattered healthcare facilities.

The implications of nationwide lockdown and global borders closure are catastrophic. The current lockdown  period  has  already  done  substantial  damage  to  the  economy  while  disrupting  supply chains and demand. The disruption in supply chain casts the issue of supply shock that has induced a   sharp   decline   in   output   and   employment.   The supply   shock   has   immediate   negative consequences  on  income  of  the  workers and  businesses causing  a  significant  contraction of aggregate  demand  in  the  economy.  This contraction of aggregate demand is also stimulated by nationwide lockdown which has forced people (consumer) to stay at home. It is clear that novel coronavirus besides causing permanent damage to lives can also hijack the functioning of demand and supply mechanism. On the background of global healthcare emergency, the virus has choked the  demand  and  supply  chains  leading  to  acute  decline  in  investments  and  skyrocketing unemployment. The global economies are awaiting an impending recession, the lockdown is just that eerie feeling of the calm before the storm, impacts of which will be clearer the over time.

The MSME sector is an important pillar of Indian economy and has emerged as one of the most vibrant part of Indian manufacturing sector. MSMEs are backbone of Indian economy and act as ancillary units to large industries. They play a pivotal role in socioeconomic development of the country through their significant contributions to employment generation being labor intensive and economic empowerment of backward areas. They are spread all over economy and promote inclusive industrialization in the country.  There are about 6.33 crore MSMEs in the country, employing about 11.10crore workers in non-agricultural activities across the country2. Every job created  in  MSME  sector or  Manufacturing  sector  in  fact has  multiplier effect  of  producing additional  2-3  jobs.  Despite  challenges,  MSMEs have  made  significant  contributions  to  exports and  economics  development  of  the  country  and  emerged  as  one  of  the  key  drivers  of  Indian economy over past five decades. Recently,  Indian  economy  witnessed  a  six-year  low growth  rate  of  4.5  %  in the quarter of  July-September 2019. This slowdown comes at a time when the economy is reviving from the turmoil of  two  policy  shocks  in  succession,  first  the  demonetization  of  86%  of  currency  followed  by introduction  of  new  Goods  and  Services  Tax  reform.  The structural changes in the economy caused a short to medium term liquidity crunch in the economy and worst hit were cash dependent MSMEs.

It is argued that this liquidity crunch also caused changes in structural composition of economy as many MSMEs couldn’t survive the muddled state of demand in the economy. India witnessed an upward trend in its GDP growth rate and became one of fastest growing  economy.  However,  in  response  to  policy  shocks  of  2016  and  2017,  the  GDP growth  rate  took  a  downturn  from  8.17  %  in  2016  to  7.17%  in  2017. The growth rate further declined by 0.19% from 7.17% to 6.98% in 2018. These worrisome statistics are not only reflecting the structural changes in the economy. Arvind Subramaniam and Josh Felman in 2019 pointed out other structural factors which contributed to decline in growth rates. The genesis of these negative market forces can be traced back to credit boom of mid-2000 which propelled a large number of housing projects. This2000s  investment boom injected  a  lot  of  money  in  real estate  sector  over  the  years.  Then came the 2008 global financial crisis which adversely impacted the investment, leaving behind a large chunk of unsold houses.  During  the  crisis,  the attention got  diverted to  unfinished  projects which  ignored  the inventory of finished projects. These projects ran into financial difficulties which over the years turned out to be cancerous to the Indian economy. Furthermore, the financial crisis also led to huge decline in world trade, which triggered significant fall in India’s export growth rate. Despite sharp dip in export and investment, the two key drivers of economy, India experienced a positive growth rate. The underlying reasons for this positive growth rate were drop in oil prices in mid-2014 and a Non-Bank Financial Company (NBFC) credit boom. The policy makers capitalized on falling  oil  prices  in  2014  to realize  income  gains by not  sharing  the  benefits of  falling oil prices from  consumer. The  NBFC  led  credit  boom  injected  a  lot  of  money  into  economy  in  an unsustainable manner while leveraging on unremunerated projects which led to creation of Non-Performing Assets (NPAs) specially in real estate sector. This NPA crisis along with pre-existing inventory  of  unsold  houses  escalated  the  situation  into  a  housing  bubble. Subsequently, the unexpected default by real estate companies terribly injured the NBFCs along with the financial sector.  This  also  includes banks  and  debt  market,  the  back  bone  of  NBFCs.  This  created  an environment of bad sentiments and risk aversion in the economy which led to sharp decline in financing  of  consumer  durable  goods  and  small  businesses  in  need  of  credit. The end of credit boom ultimately got translated into contraction demand starting from late 2018. The pandemic  comes  at  a  time  when  economy  was  experiencing  sharp contraction  in  demand. Given the situation of banking sector, the economy’s immune system is not ready to respond to malign impacts of corona virus. The government is armed with limited policy stimulus due to lack of fiscal headroom. The India’s fiscal deficit FY2019-20 was 3.8% against the expected target of 3.3%. It highlights the weak fiscal health of economy. The outbreak of corona virus, will further impact  the  fiscal  health  with  rising  health  sector  expenditure  and  sharp  decline  in  government revenue  generation.  This  time  unlike  2008  financial  crisis,  the means  of  government  are  limited and the fiscal and financial weapons of government need repair. The addition of pandemic induced slowdown to current slowdown will have devastating effects on every section of economy.  The next section talks about potential implication of pandemic and domestic and global lockdown on MSMEs sector.

IMPLICATION OF CORONA VIRUS ON INDIA’S MSME SECTOR

The unprecedented lockdown has brought a state of disarray in the economy. The lockdown of a country in response to a pandemic severely constrains the demand and supply. Millions of migrant workers  are  stranded  in  sealed  cities  with  no  job  and  income.  As the economic activities are at standstill, millions of livelihood and businesses are at stake. There has been a complete collapse of global and domestic supply chains with no movement of raw material and finished goods due to abrupt closure of national and state borders. The economy is also experiencing a demand shock as the spending is only limited to essential expenditures. The crushing impact of covid-19 will be on both MSMEs and  larger  firms,  however the  impact  will  be  more  apparent on  the  vulnerable MSMEs. TheCovid-19 pandemic is a seismic pressure threating the supply chains. With cities sealed all over India and no movement across state borders, the production activities and supply chains are at standstill. Lockdown attacks domestic supply chains via two channels

1. Nationwide lockdown halts all production activities, thus the value added production in a flash becomes zero except for certain essential goods.
2. The shortage of inputs will drive severe contractions in production. This latent shortage of input may be owing to the logistical barriers or may be a chain reaction of former. These supply shockwaves propagates across both upstream and downstream supply chains, which will substantially impact   the   manufacturing   sector. Furthermore, in   a   world   of   strongly interconnected economies the corona virus also profoundly impacts the global supply chain networks. China, the epicentre of corona virus is also the epicentre of flow of intermediate goods. China is considered to be workshop of the world play a major role in network of global trade and production. For Indian MSMEs with no other alternatives, China is an important and sole supplier of certain essential Industrial inputs and components. MSMEs will be hard-hit by shortage of raw material and their soaring prices. They will find it harder to acquire imported necessary industrial inputs due to port restriction and vessel constraints. Additionally, the worsening exchange rate will further make then expensive and add to their cost. Furthermore, apart from direct impact on supply of intermediate goods, supply chain disruption will also have an indirect impact on Indian MSMEs.  For  instance, China  may  export  some electrical  component  to  Japan  which  may  be  a crucial component for production of some electrical device which at the end of supply chain is imported by some Indian MSME producing some consumer durable product. The repercussion of supply chain disruption will last longer than expected and will not vanish even after the virus has been contained. The longer the crisis last, the more difficult it will be for global supply chain network to bounce back. In  addition  to  supply  shocks,  Indian  MSMEs  also  need  to  tackle labor  shock. The sudden declaration  of  lockdown  triggered  the  movement  of  thousands  of  migrant  laborers  to their respective village who were stuck in cities with no food, savings, shelter and jobs. Many are still stuck in cities desperate to go back to their villages. The firms will have to tackle the shortage of labor  since  many will  prefer  staying  at  their  villages  with  their  families. The environment of uncertainty has sparked a fear of going back to work among workers. Additionally, MSME sector works differently and majorly relies daily demand of its consumer. With people staying at  home there  is  a halt  in  revenue of  MSME sector,  which do  not have enough liquidity  to  incur  their working costs. A large component of their working cost is wages of laborers. For MSMEs, change in work process through shift to work from home is not possible because of nature of production processes which requires physical presence of labor at the units. Hence, the units are forced to pay salaries to their workers in times of almost no labor utilization and liquidity shortfalls. The wage pressure is putting  labor  intensive  MSMEs  under extraordinary burden  and many  will  consider laying  off  their  employees. MSMEs were already in a distressing situation due to exhausted consumption in the economy which has significantly contacted their revenue. Furthermore, many MSMEs were underutilizing their labor as many felt the initial supply shockwave from China in the beginning of 2020 which further constrained their liquidity. The Pre-Coronavirus dynamics of the economy substantially stressed the balance sheet in conjunction with underutilization of labor, now accompanied by nationwide lockdown further intensifying their financial stress. The burden of  wages  in  lockdown  period  has  triggered  a  severe  liquidity  crunch  among  MSMEs. Their sustainability is at stake. Additionally, the corona virus is infecting labor and causing damage to human capital of firms as well.  The corona virus may leave behind a prolonged labor crisis. According to a study, the decline in labor supply triggered by Spanish flu in 1918 raised wages and prices of goods and services by 5%7. On Demand  side, the  consumers  are  forced  to  stay  at  home  which  has  caused  a  demand stagnation in the economy. The consumer behavior in times of pandemic is risk aversive. The consumer assumes the worst outcome and then takes his decision based on this assumption. The  consumption is  only  limited  to  essential  goods  with  no  expenditure  on  non-essential  goods  and  services. This  behavior  is  not  transient  and  will  prevail  in  economy  for  a substantial  period  of  time especially  in  the  case of non-essential goods i.e. one of  key  driver of aggregate demand. The pandemic comes at the worst possible moment as the country’s economic environment was full of tensions.  As the growth prospects were uncertain, the economy was projecting a possible recession. However, the sudden stop of economic activities in the wake of covid-19 pandemic makes it clear that the Indian economy is now destined to witness an inevitable recession. But this time the virus will set the magnitude of recession for India. The corona virus while paving the way for recession will stem new lows of employment rates. The salary cuts and lay off will lead to overall reduction in business and consumer confidence. The consumers will be left with less disposable income which will severely impact the demand. Furthermore, the negative impacts of lockdown and supply shock to manufacturing sector will also have ripple effects on investment, employment and income, all of which will sharply decelerate demand. Subsequently, the sluggish demand will lead to fall in price levels which in turn will prompt a fall in supply while following principles of basic economics.  These interconnected shocks are ultimately pushing economy into a downward spiral while souring the market of vulnerable MSMEs. The corona triggered demand shockwaves are boundless and go beyond the real domestic demand. It will naturally spread and infect the global demand scenario. The corona virus is also a global demand shock; fall in imports of other economies will be profoundly disturbing to exports receipts of India. The decline in global trade will negatively impact the globally exposed Indian MSMEs. Exporting MSMEs are more impacted than Non-exporting MSME are  susceptible to both  disruption  in  supply  chain  and  loss  of  global  markets. As per Directorate General of Commercial Information and Statistics, the share of MSMEs in total exports from India directly and indirectly is 48.10% FY 2018-19, nearly half of India’s exports. The MSMEs export industry is worth INR 6 Lakh crore. Exporting MSMEs  which  account  for  35  % of  pearls/gems/jewelry/Metals, 8% of electrical & electronics equipment, 11% of articles of apparels and 40% of other  exports  will  find themselves  in  precarious  situation  with  the  collapse  of  the  international demand  for  their  products. Though  coronavirus  could  be  a  double-edged  sword  for  MSMEs, those involved in pharmaceutical sector as India is key player in global generic medicines supply. In the meantime,  exporting  MSMEs  will  be  under  immense  stress  conscious  of  their  weak  financial position. Their capacity to continue their operations is diminishing and their market is deteriorating day by day. Major Destination of exports for India among Covid-19 countries, USA, China, Singapore, Hong Kong and UAE are major export destinations for India. The value of exports to these countries is substantial, roughly about 38% of total exports earnings. Still, these countries are on different lockdown stages which have induced a global demand slowdown which will shut down one of growth engine of Indian economy i.e. exports   and weaken   the   backbone   of  Indian   economy   supporting exports   i.e.   MSMEs. Furthermore, the situation of world trade will deteriorate further. The impact of covid-19 induced recession will be more on world trade than growth rates.  During  2008  Global  Financial  Crisis, there  was  an  exceptionally  sharp  contraction  in  global  trade  volume  and anomalies  of  such recession induced trade contractions is that they are not short term and last for more than a year. This behavior of world trade has been typically witnessed in other recessions as well. World trade will possibly adhere to this behavior in corona induced recession. It  is  clear  that  corona  virus  through  its  triple  crisis  (i.e.  demand,  supply  and  labor  crisis)  will exacerbate  myriad  of  problems  to  the  sensitive  MSME  sector. The multidimensional impact  of coronavirus  on  cashflow  of  MSMEs  can  lead  to  perpetual  closure  of  a  lot  of  units.  As a consequence, Millions of migrant laborers will lose their livelihood. With sustainability of MSMEs at stake  the  prospects of economic  development  of  India presents a  very  gloomy  picture considering MSMEs contribute about 30-35% to the GDP .Policy Recommendations Given the weak fiscal position of India, the government must assist enterprises in opening as soon as possible in a phased manner. The formulation of supportive policy must take into consideration the  demand,  supply  and  labor  shock  and  must  be  tailored  to  the  unique  challenges  faced  by MSMEs. That said, the supportive policy framework could consider following recommendations –1.Wage  support can  be  given to  labor  intensive  MSME units  to  incentivize  them to  retain their  employees  and  to  avoid colossal  number  of  layoffs  by  firms.  The government can offer to pay a part of wages to the employees which will relieve the financially encumbered MSMEs from huge liability.  Additionally, such  wage  support policy will  also  provide essential  income  support  to  laborers  in  such  extraordinary  times.  The salary/wages of identified recipients could be directly transferred to their Jan Dhan accounts.2.While addressing the liquidity crunch, the government should encourage banks to increase share of lending to MSME sector with flat interest rates that would free up their attention from liquidity shortfalls so that they could focus on their core business. Additionally, they must be offered deferment from payments like electricity bills, water charges, property tax etc. Also, they must be allowed to defer from loan payment without any penalty until the demand of economy is somewhat restored and payment cycle of economy is back on track. The  worst  hit  MSMEs  involved  in  exports  could be  given a tax holiday  and medium to long term loan with 4-6% interest rate. The government should reduce duties on imports to safeguard MSMEs from their souring prices of imported inputs.  Also, the government of India should take initiatives at international platforms like G20 to address the global world trade slowdown though policy coordination and collective action.  In such unprecedented times, the policy support should be well targeted given the limited stimulus amount. However, presently the  government has  no  accurate  data on MSMEs  relies on  Fourth MSME  census  conducted  in  2006-07.  In  future before  any long-term policy formulation, the government should conduct  the  census  of  MSME  now  that  the  government  has  changed  the definition  of  MSMEs  based  on  investments  level  recently while  declaring  the  second  stimulus package. An accurate data on MSMEs is perquisite for well-defined policy formulation and well-targeted policy implementation to catalyse the recovery of backbone of the economy.

Year 2020 marked by several pathbreaking initiatives in MSME Sector

Rs 10000 crore Fund of Funds Scheme Launched to leverage equity infusion of Rs 50000 crore

MSME definition broadened to enable them grow bigger; registration made simple through Udhyam

Champions Portal based on ICT operationalised to help MSMEs utilise opportunities

The Ministry of Micro, Small and Medium Enterprises (MSME) has undertaken several path-breaking/ important initiatives during the year 2020. These include putting in place financial support mechanism through Fund of Funds, broadening definition of MSMEs, introducing IT based Champions platform to provide solutions to issues of MSMEs, encouraging entrepreneurship amongst khadi & village industries and to promote self-employment. The following paras provide glimpse of various initiatives of the Ministry during 2020:

1. AatmaNirbhar Bharat Initiatives:

i)    Distressed Assets Fund -Subordinate Debt for MSMEs- Credit Guarantee Scheme- 

      Sub Debt (CGSSD):

• With Government of India assistance of Rs. 4000 crore, provisioning of Rs. 20,000 crore as subordinate debt to provide equity support to the stressed MSMEs has been launched on 24.06.2020. During the current year, upto November 2020, guarantee to 121 borrowers amounting to Rs. 12.49 crore have been extended.

ii)  Fund of Funds Scheme for MSMEs:

• The Guidelines of Self-Reliant India (SRI) Fund (Fund of Funds for MSMEs Scheme) with a corpus of Rs 10,000 crore, which will leverage equity infusion of Rs. 50,000 crore for MSMEs has been issued on 5^th August 2020. For anchoring the Mother Fund, NSIC Venture Capital Fund Ltd. (NVCL), subsidiary company of National Small Industries Corporation Ltd. (NSIC) has been incorporated under The Companies Act 2013. Ministry is taking further steps for operationalization of the SRI Fund.

2. New MSME Definition & Udyam Registration:

• Ministry of MSME, vide notification no. S.O.2119 (E) dated 26.06.2020, has notified a composite criteria of classification of MSMEs based on investment in plant & machinery/equipment and turnover of MSMEs. The guidelines regarding composite criteria of classification of MSMEs is available on link: https://msme.gov.in/sites/default/files/IndianGazzate.pdf.
• Based on composite criteria of classification, Ministry has replaced the erstwhile process of filing of Udyog Aadhaar Memorandum, by ‘Udyam’ registration on a portal developed by the Ministry. Now the existing and prospective entrepreneurs may file their ‘Udyam’ registration online on portal: https://udyamregistration.gov.in.
• As a result of change in classification criteria, an enterprise shall be classified as a micro, small or medium enterprise on the basis of the following criteria, namely:-

(i) a micro enterprise, where the investment in plant and machinery or equipment does not exceed one crore rupees and turnover does not exceed five crore rupees;

(ii) a small enterprise, where the investment in plant and machinery or equipment does not exceed ten crore rupees and turnover does not exceed fifty crore rupees; and

(iii) a medium enterprise, where the investment in plant and machinery or equipment does not exceed fifty crore rupees and turnover does not exceed two hundred and fifty crore rupees.

• The new classification has come into effect from 1^st July, 2020. This has been done in order to be realistic with time and to establish an objective system of classification and to provide ease of doing business. The earlier criterion of classification of MSMEs under the MSMED Act, 2006 was based on investment in plant and machinery/equipment. Since then, the economy has undergone significant changes. It was different for manufacturing and services units and was also very low in terms of financial limits.
• The new criteria is expected to bring about many benefits that will aid MSMEs to grow in size. It has also been decided that the turnover with respect to exports will not be counted in the limits of turnover for any category of MSME units whether micro, small or medium. This is yet another step towards ease of doing business. This will help in attracting investments and creating more jobs in the MSME sector. The change in criteria of classifying the MSMEs is set to offer major relief to the exporters.

3. Champions Portal :

• CHAMPIONS portal launched by Prime Minister on 1^st June, 2020, is an ICT based technology system for making the smaller units big by helping and handholding them. The portal is not only helping MSMEs in the present situation, but also providing guidance to grab the new business opportunities.
• A network of control rooms is created in a Hub & Spoke Model where hub is situated in the office of Ministry of MSME, New Delhi while the spokes are located in the States in various offices and institutions of Ministry.
• Central Control Room in New Delhi and 68 State level control rooms are created which have been providing every possible support on a local level to MSMEs in the areas including finance, market access, technology upgradation, skill development etc.
• With a view to resolve the grievances pertaining to other Govt. Departments/Ministries in a fast track manner, Ministry is in process of on boarding other Government entities. 16 Ministries/ Departments and 25 State Governments have already on boarded on the platform.
• 54 Banks/FIs/RRBs/SFCs have been on-boarded on the portal with 19 banks belonging to private sector to address the queries related to Credit in a fast track manner.
• 52 CPSEs have appointed nodal officer for Champions portal to resolve the queries on fast track mode.
• GeM has also been onboarded on the portal with the appointment of a nodal officer.
• More than 750 FAQs have been already uploaded on the portal to help the MSME units for better understanding of schemes related to MSMEs.
• Integration with various portals such as MSME Samadhaan, Udyam Registration, etc.
• Provision to capture ideas and suggestions received from MSMEs.
• Upto 15^th December 2020, more than 25,000 queries/grievances have been received on the portal and more than 24,550 queries i.e. approximately 98% have been responded while around 450 queries are in process to be resolved.
• The aforesaid grievances have been segregated in different categories i.e. MSME Schemes/UAM /Udyam Registration/Definition of MSME, finance, related to MSME-DI & DC-MSME offices, new schemes announced under Atmanirbhar Bharat Abhiyaan, public procurement policy, testing and quality centers, etc. for easy identification and better resolution.

4. Prime Minister’s Employment Generation Programme (PMEGP):

• PMEGP is a major credit-linked subsidy programme aimed at generating self-employment opportunities through establishment of micro-enterprises in the non-farm sector by assisting traditional artisans and unemployed youth in rural as well as urban areas. Khadi and Village Industries Commission (KVIC) is the nodal agency at the national level. At the State/district level, State offices of KVIC, Coir Board, KVIBs and District Industry Centers (DIC) are the implementing agencies.
• PMEGPwas launched in 2008-09, a total of about 6.25 lakh micro enterprises have been assisted with a margin money subsidy of Rs 14,500 crore providing employment to an estimated 53 lakh persons since inception till 30.09.2020. About 80% of the units assisted are in rural areas and about 50% units are owned by SC, ST and women categories.
• During the period January 2020 to 30^th November 2020, 60,211 micro enterprises have been assisted with margin money subsidy of Rs. 1743.84 crore generating employment for about 4.81 lakh persons.

Recent initiatives:-

• Scheme process has been simplified by discontinuing the role of District Level Task Force Committee (DLTFC) in selection of applications, to speed up selection and setting of units under PMEGP on Score Card model.
• Provision is made for engaging marketing and technical experts in all States for providing handholding and mentoring to PMEGP beneficiaries.
• Online Entrepreneurship Development Programme (EDP) training portal has been introduced and beneficiaries are being encouraged to take on-line EDP training in prevailing Covid19 conditions.
• Diversification of products by PMEGP units has been permitted to increase the economic viability of the units according to market needs and the prevailing Covid19 circumstances.
• A geo-tagging portal namely www.geotag.kvic.gov.in is prepared and is being put into operation.  All the micro-enterprises setup under PMEGP will be Geo-mapped, facilitating easy location and monitoring of units.

5. ‘Credit Link Capital Subsidy’ component under Credit Linked Capital Subsidy-Technology Upgradation Scheme (CLCS-TUS):

• During the period January 2020 to 30^th November 2020, about 7500 MSEs have been benefited by way of releasing of Rs. 540 crore approximately.

6. Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE):

• During the period January 2020 to 30^th November 2020, a total of 8,99,377 guarantees have been approved, these guarantees involved an amount of Rs. 40,178.35 crore.

7. Interest Subvention Scheme for Incremental Credit to MSMEs- 2018:

• During the period January 2020 to 30^th November 2020, a total of 11,15,364 borrowers have been benefited by releasing an amount of Rs. 337.32 crore.

8. Cluster Development Programme:

• 62 New Projects, with total project cost of Rs. 556.58 crore and GoI grant of Rs. 387.24 crore, have been given final approval during the period January 2020 to October 2020. Out of these approved projects, 32 projects are for setting up of Common Facility Centers (CFCs) in the States of Gujarat, Himachal Pradesh, Jharkhand, Karnataka, Kerala, Maharashtra, Odisha, Nagaland, Tamil Nadu, Telangana etc. The remaining 30 projects are for Infrastructure Development (ID) of Industrial Estates in the States of Nagaland, Punjab, Rajasthan, Telangana and Tamil Nadu etc.
• 7 On-going Projects have been completed during the period January 2020 to October 2020. The CFCs which have been set up are Cashew Processing Cluster, Kumta, Uttar kannada, Karnataka; Cotton Fabric Cluster, Hathkangle, Kolhapur, Maharashtra and Pharmaceutical Cluster, Cuttack, Odisha. 4 Infrastructure Development Projects have also been commissioned.

9. SFURTI Clusters:

• Under the Scheme of Funds for Regeneration of Traditional Industries (SFURTI), from the year 2015 to 30^th November 2020, 317 clusters have been approved with GoI grant worth Rs. 736.67 crore that will benefit about 1.88 lakh artisans. 65 of these clusters are approved in North Eastern Region. 78 of 317 clusters are functional, out of which 55 became functional in 2019-20.
• During the period January 2020 to November 2020, 124 SFURTI cluster proposals have been approved.

10. Technology Centres/Tool Rooms:

Achievements of 18 MSME Technology Centres (TCs) during the period January 2020 to 25^th   November 2020 are listed below.

• 18 Technology Centres located across the country have trained 1,65,409 trainees and assisted 28,226 units.

• The Council of leather Exports presented the Award at the Inaugural function of 53^rd Leather Research-Industry Get-Together (LERIG) 2020 which was held on 28^th January 2020. Central Footwear Training Institute (CFTI), Agra bagged 5 awards (First Prize) in different categories. CFTI Chennai received 1 award (first prize) in Best Shoe Design Ladies and Trendy Category.

Developing Import Substitute or assistance in development of Import Substitute (as part of Atmanirbhar Bharat initiative):-

• Central Tool Room and Training Centre (CTTC), Bhubaneswar has developed and manufactured various parts like Crimping Dies, Procar needle parts, Coronary connectors used for Robo surgery for M/s Robosurge Medtech Pvt. Ltd. Vizag. Needle part is an Import substitute (being imported from China).

• CTTC Bhubaneswar has also developed some parts of Hydraulic System Filters for Tejas Aircraft (Indian single-engine, fourth-generation, multirole light fighter Aircraft).

• Indo Danish Tool Room (IDTR), Jamshedpur has developed following Parts:-

a) Japanese Ultimate Quick Changer (JUQC) Mechanism which is used in continuous casting process in Steel industries.

b) AL-90 Slide Gate Mechanism used at a temperature of 1550°C to control the flow of molten steel from ladle to Tundish in steel plant. It is assembled and being tested. This will be installed in the largest ladle of 350T capacity in JSW Dolvi, Maharashtra.

c) Auto coupler of Argon gas injector through reverse engineering for Tata Steel Ltd. It was being imported from DMG Germany (a manufacturer of machine tools).

d) Refractory Handling Fixture (Import Substitute) for Tata Refractories Ltd. The fixture will be used for replacement of Refractory Nozzle from AL80 Slide Gate Mechanism which works at more than 1500°C.

• Indo German Tool Room (IGTR), Indore has successfully manufactured 14-Cavity body mould (Import Substitute) for 360ml IV fluid bottle for M/s Euro life, Roorkee.
• Central Tool Room (CTR) Ludhiana has assisted Local MSME Units by providing testing lab facility for identification of material and mechanical properties of Textile machinery part and knitting machinery parts (Import Substitute).

For Covid-19 related, MSME TCs have developed, manufactured various components/products and shared these with MSMEs for domestic/indigenous production and marketing. Details are as follows:

• Some parts of PPE Kit. Apart from this, MSME-TC, Meerut also has NABL Accredited Testing facilities for PPE kits testing.
• Some parts of Corona Testing Kit. This kit is an indigenous machine for Polymerase Chain Reaction (PCR) testing for COVID 19.

• Automatic sanitizer machines/ full body sanitizer tunnels/ UV (Ultra Violet) Sensitization equipment for hand sanitization/ UV Disinfector Tower – for sanitization of office rooms and class rooms/ UV Sanitization Wooden Box for Files/ Alcohol based hand Sanitizer along with Testing Facility at MSME-TC, Kannauj/ Dispenser units for hand sanitization / Safety Goggles/ Face shield/ IR (Infra Red) Thermometer/ Medical Gowns/ Sanitizer Bottle Pump (7 components)/ Prototype developed for Plasma Activated Ozone Sanitizer for the use of hand sanitization/ Prototype of Pulse Oxy Meter under development/ Non-Invasive CPAP type Ventilator Machine etc.
• Electronics Service & Training Centre (ESTC), Ramnagar’s Innovative Product UV Sanitization Wooden Box being listed on https://www.agnii.gov.in/innovation/uv-sanitization-box Agnii (Accelerating Growth of New India’s Innovations) – AGNIi Mission– a flagship initiative under the Office of the Principal Scientific Adviser, and one of nine technology Missions under the Prime Minister’s Science, Technology and Innovation Advisory Council (PM-STIAC)
• Many Webinars have been organized by most of the TCs as per need of the industry on topics like, Transitioning from Face to Face to Online Teaching, Prioritization and Methodologies to Kick Start the Industry Post COVID-19 Pandemic, Preparedness for re-opening of Shoe manufacturing unit etc. for MSMEs, Startups, Students, Academia, Faculty & Industry.

11. Technology Centre Systems Programme (TCSP):

• Looking at the successful functioning of the existing Technology Centres (TCs) and with a view to expand and upgrade the network of Technology Centres (Tool Rooms and Technology Development Centres) in the country, Ministry of MSME launched the Technology Centre Systems Programme (TCSP) at an estimated Projected cost of Rs 2200 crore to establish 15 new Technology Centres (TCs) and upgrade existing TCs across the country.

• TCSP has been conceptualized to create innovative eco-system for the MSMEs in the country.

• The implementation of the programme commenced from 15^th January 2015.

• Construction work contract signed for 13 new TCs (Rohtak, Bhiwadi, Baddi, Bengaluru, Durg, Puducherry, Vishakhapatnam, Sitarganj, Bhopal, Imphal, Ernakulam, Greater Noida and Kanpur) out of total 15 new TCs. Civil work is at advanced stage at most of these TCs.
• Construction works of three TCs at Bhiwadi, Pudi and Bhopal have been completed. Construction work for two more TCs at Rohtak and Puducherry are expected to be completed by December 2020, additional eight TCs are expected to be completed by May 2021.

• New Technology Centre at Bhiwadi was inaugurated by Shri Nitin Jairam Gadkari, Union Minister of MSME and Road Transport & Highways, on 31^st August, 2020.
• Training programmes have also been started at 11 New TCs and 1824 persons have already been trained during the period January, 2020 to November, 2020.
• AICTE approval to run long term courses has been received at six TCs at Bhiwadi, Bhopal, Durg, Rohtak, Pudi and Baddi.

12. Technology Centres/ Extension Centres (TCEC):

• To augment the network of 18 existing Technology Centres, and 15 new Technology Centres being established under World Bank assisted Technology Centre Systems Programme (TCSP), a new scheme, “Establishment of new Technology Centres / Extension Centres”, was announced by Hon’ble Prime Minister on 2^nd November, 2018 as part of the 12 point outreach programme for MSMEs.
• The scheme envisages establishing 20 Technology Centres (TCs) and 100 Extension Centres (ECs) at an estimated cost of Rs 6000 crore to enhance outreach of TCs/ECs throughout the country. These TCs/ECs provide various services like technology support, skilling, incubation and consultancy to MSMEs and skill seekers leading to enhancement in employability of the skill seekers, competitiveness of MSMEs and   creation of new MSMEs in the Country.
• During the period January 2020 to October 2020, 13 Extension Centres out of 22 Extension Centres (which were approved for establishment during FY 2019-20) have started training activities and trained 10,240 trainees. List of 22 Extension Centres are given below.

• In addition, for establishment of 20 Technology Centres, locations have been finalized. While land at Saha in Ambala and Samba in Jammu and Kashmir is already in possession of the Ministry, land at Rourkela, Bokaro, Warangal, Coimbatore and Jabalpur has also been finalized and is in process of transfer by the respective State Governments.

13. Credit Linked Capital Subsidy – Technology Upgradation Scheme (CLCS-TUS):

Achievements under the CLCS-TUS schemes during the period January 2020 to November 2020 are listed below.

14. Procurement and Marketing Support:

• Focusing is being made on virtual trade fairs to increase e-market linkages.

• Ministry of MSME is planning to establish permanent Exhibition centers in the premises of MSME-Development Institutes for wider market accessibility in consultation with India Trade Promotion Organization (ITPO).
• Proposals for workshops/training programmes on packaging of handicrafts and toys in Varanasi, Uttar Pradesh have been approved to expand the marketing possibilities for Artisans and Entrepreneurs.

15. Public Procurement Policy for MSEs Order, 2012:

• All Central Government Ministries/ Departments and CPSEs are required to procure 25% of their annual requirements of goods and services from MSEs including 4% from MSEs owned by SC/ST and 3% from MSEs owned by women entrepreneurs under the public procurement policy.

• The progress of procurements from MSEs is regularly monitored through MSME-SAMBANDH portal. Procurement from MSEs (as on 12^th November, 2020) (during the period January, 2020 to October, 2020) is Rs. 25,068.38 crore which is 33.30% of total procurement and 1,14,424 MSEs have been benefitted. We have over achieved the target minimum of 25 percent, as set in November, 2018.
• To enhance the scope of procurement from MSEs, steps have been taken by the Ministry for mobilizing MSEs for onboarding themselves on GeM portal for supply of goods and services from MSEs.

16. GeM- Government e-Marketplace:

• Registration of Micro and Small Enterprises (MSEs) on GeM as on 03.12.2020: 3,47,497
• 57.60 % of orders value on GeM portal is from MSEs.
• GeM and TReDS platforms have been integrated.
• UAM Portal has been replaced by Udyam registration Portal w.e.f. 01.07.2020. Udyam Registration Portal has facility through which an entrepreneur can opt for linking itself with Government e-market (GeM) place by selecting an option on Udyam Portal. The enterprise will be linked to GeM portal and flow of information will start between these two portals. With this facility, MSEs can link themselves with the Government’s procurement system and can participate in Government’s mandatory procurement programme from MSEs.

17.  Entrepreneurship Skill Development Programme (ESDP):

• More than Rs. 63.6045 crore sanctioned for organising different skill development programmes throughout the country through State Governments agencies/Industry Associations/ Social Enterprises/Government Corporations.

• 947 programs have been conducted during the period January 2020 to November 2020.

18. Promotion of MSMEs in North Eastern Region (NER) and Sikkim:

• The Project Approval and Monitoring Committee (PAMC) has approved 12 projects during the period January 2020 to November 2020 with a total project cost of  Rs. 90.40 crore having Rs. 58.75 crore as Government of India contribution.
• Out of these 12 projects, 8 projects are for development of Industrial Estates at Assam, Mizoram and Sikkim. 4 projects are for setting up of Technology Centres, 2 at Sikkim and 1 at Nagaland. Total 2 projects having Government of India contribution of Rs. 2 crore has been completed under the scheme.

• 1 International training programme has been organized at Singapore for 24 officers under capacity building of officers engaged in promotion of MSMEs in NER and Sikkim.

19. National Schedule Caste and Schedule Tribe Hub (NSSH):

Interventions undertaken under National SC-ST Hub and the achievements during the period January 2020 to November 2020 include the following:

• A sum of Rs. 56.22 crore has been released to the 532 SC/ST Micro/ Small enterprises under the Special Credit Linked Capital Subsidy Scheme (SCLCSS) of NSSH.
• 9,240 SC/ST candidates have been provided capacity building skill / entrepreneurship development training in various sectors through 40 autonomous training institutes across India.
• 3422 sector-specific toolkits have been distributed to SC/ST candidates successfully trained under the capacity building training programmes.
• 2795 SC/ST MSEs have availed subsidy on membership fee of B2B Portal “MSME Mart”.

• 399 SC/ST MSEs have availed subsidy for registrations under Single Point Registration Scheme (SPRS).

20. Popularising Khadi and Empowering Village Industries:

New Products launched by Khadi and Village Industries Commission (KVIC):

• Khadi Rumal: Rehabilitating the women artisans of militancy affected Nagrota of J&K, KVIC started manufacturing centers of Khadi Rumal and the same will be sold through Paytm Mall and other sales outlets.

• Bamboo Bottles, Sanitary Napkin and Cow Dung Soap: Bamboo Bottles, Sanitary Napkin, Cow Dung Soap, made by artisans using solar charkha have been launched for sale at Khadi India.

• After execution of MoU with Indo Tibetan Border Police (ITBP), KVIC has started supply of Mustard Oil to ITBP. Agreement has also been made with ITBP for supply of Cotton Durrie. KVIC has started supply of different consumable items, like Aachar, Morobba, Honey, Papad, Agarbatti etc. to Central Police Canteens (CPC).

• Considering the need of the Nation to fight against COVID-19 pandemic, KVIC had initiated to manufacture Khadi Mask, made from cotton Khadi and silk Khadi. With this initiative, in one side rural artisans got the opportunity of getting more employment during COVID-19 and in other side all citizens have also got the opportunity of fighting against COVID-19 by using reusable and washable Khadi mask at bare minimum price. To make the mask widely available on PAN India basis, besides distributing the same through District Administrations, KVIC had supplied the mask to different Government offices and make it available through GeM portal and online sale for end-users. KVIC had also supplied more than 12 lakhs Khadi mask to Indian Red Cross Society.

• KVIC had opened Sales Outlet at Ekta Mall, Kevadia, near Statue of Unity to showcase the Khadi and Village Industries products to all International and National tourists.

• Considering the need of present generation, KVIC had started online selling of all KVI products. Now KVI products are available to every Indian’s door step through www.kviconline.gov.in and www.ekhadiindia.com. Further to facilitate customers to make online payment at “Khadi India” “Khadi Gramodyog Bhavans”,  E-wallet Payment system has also been made available through Khadi Gramodyog Bhavans (KGB), New Delhi and Mumbai.

• KVIC participated in “Spring Fair 2020” at Birmingham in UK during 2^nd to 6^th February 2020 with KVI institutions/units and displayed their exportable products. Very encouraging response was received in this Exhibition from customers and gave good platform to interact with various other market players.

• KVIC also participated in International exhibition in FERIA INDIA- India Show 2020 organized by India Trade Promotion Organization (ITPO), Ministry of Commerce and Industry, Govt. of India, with support of the Embassy of India at Peru, held at the prominent Jockey Exposition Center, Surco, Lima (Peru) from 11^th to 15^th March, 2020 with eight Khadi Institutions and one Village industry institution and displayed Khadi products, Readymade garments, handicraft and herbal products. The Exhibition provided an opportunity and strong platform to showcase quality of KVI products.

• On 30^th January 2020, Shri Nitin Jairam Gadkari, Hon’ble Union Minister of MSME had launched limited edition of “Titan Khadi wrist watch” as a tribute to Mahatma Gandhi at New Delhi. Designed by Titan, a non-horological material like Khadi has been used on the dial and strap of the watches for the first time ever. Since Khadi is hand woven, every single watch in this collection is unique because of the distinctive weave and texture. The straps of the watches have also been treated with a special coating to make them more durable without compromising on its authentic texture.

(vii) Apiary on Wheels:

• On 13^th February 2020, Shri Nitin Jairam Gadkari, Hon’ble Union Minister of MSME had launched “Apiary on Wheels” in a unique concept designed by KVIC for the easy upkeep and migration of Bee Boxes having live Bee colonies, in Delhi, in the presence of Chairman, KVIC.

• On 16^th July, 2020 the first-of-its-kind footwear training center in Delhi to train the marginalized community of leather artisans was inaugurated by KVIC. The center has been established with the technical knowhow of Central Footwear Training Institute (CFTI), Agra, a unit of the Ministry of MSME.

• Performance of Khadi & Village Industries during the period January 2020 to October 2020 is given below.

                              (Rs. in crore and Employment in lakh persons)

21. Coir Vikas Yojana:

•  Export of Coir & Coir Products : Rs. 2190.44 crore (January 2020 to August 2020)
•  Production of Coir & Coir Products : 5,53,000 M T. (January 2020  to October 2020)
•  Employment Generation: 1079 Nos.  (January 2020  to October 2020)
• Ministry of MSME has so far accorded final approval for 41 coir clusters under Scheme of Fund for Regeneration of Traditional Industries (SFURTI) in the 2^nd phase of implementation from November 2015 with a total project cost of Rs. 142.47 crore, where GoI grant is Rs. 118.17 crore.

• These approved 41 coir clusters comprise of 2 Heritage, 19 Major, 11 Mini and 9 Regular clusters. Out of which, 14 clusters are located in Tamil Nadu, 4 each in Kerala and Andhra Pradesh, 8 in Karnataka, 5 in Odisha, 2 each in Gujarat & Maharashtra, 1 in UT of Andaman & Nicobar Islands and 1 in West Bengal. The Ministry has so far released an amount of Rs. 82.14 crore for implementation of the scheme.

• During the period January, 2020 to November, 2020, Rs. 408.24 lakhs has been released to establish 123 coir units under the scheme.

Conclusion

Despite being lethal to the Indian economy, the corona virus apertures the opportunity for India to emerge as a Global Manufacturing Hub while realizing its Make in India policy in true sense. India can capitalize on the change in global outlook of China’s manufacturing sector following the outbreak  of  corona  virus,  and  come  to  light  as  an  alternative  manufacturing  destination  while gradually cutting leakages to China through achieving self-sufficiency in manufacturing of inputs. India should strive to achieve self-sufficiency in production of inputs in the same fashion as India progressed to achieve self-sufficiency in food grain production during the initial five-year plans. This  can  be  done through  identifying  the imported  inputs  and  facilitating  the  establishment  of MSME units of such components. The growth prospects of MSMEs are high and they have the capacity of propelling India out of recession provided the government will have to nurture them just  like  a  bird  feeds  a  baby  bird as  the  economy  limps  back  to  normalcy.  Eventually, just like nurtured baby birds these MSMEs will spread their wings and fly while driving the Indian economy towards new highs of growth