Upload
rudrasaxena
View
215
Download
0
Embed Size (px)
Citation preview
8/8/2019 Challenges and Problems New
1/26
Challenges and problemsfaced by MSMEs
8/8/2019 Challenges and Problems New
2/26
Introduction:
y The term small and medium-sized businesses or SMBs is predominantly usedin the USA and then EU has started standardized the concept.
USA
Micro --
8/8/2019 Challenges and Problems New
3/26
8/8/2019 Challenges and Problems New
4/26
Contribution to economy:
y In Indian economy, the MSME sector is the second largest contributorin terms of GDP after agriculture sector. It provides almost 80-90 % ofemployment to the Indian population and has 45% share in productionand 35% in exports. In the year 2006, the MSME Act generated huge
employment opportunities for the common people.
y The major advantage of the sector is its employment potential at lowcapital cost. As per available statistics, this sector employs an estimated31 million persons .
y Indian SMEs are making tremendous progress in Industry, Service,Retail, IT, Agro and Food Processing, Pharmaceuticals, PrecisionEngineering and Manufacturing Sectors.
8/8/2019 Challenges and Problems New
5/26
The Government portfolios on MSMEs:
y Measures for promotion and development:
Programmes for development of skills in the employees, management
and entrepreneurs, provisioning for technological upgradation,providing marketing assistance or infrastructure facilities.
y Credit Facilities:Credit facilities are provided to minimize the incidence of sicknessamong and enhance the competitiveness of such enterprises.
8/8/2019 Challenges and Problems New
6/26
Cont.
y Procurement preference policy:
Procurement policies in respect of procurement of goods and services.
y Funds:
Grants are made by the Central Government under section 13.
8/8/2019 Challenges and Problems New
7/26
8/8/2019 Challenges and Problems New
8/26
Issues faced by MSMEs:
y Inadequate industrial infrastructure :
1. Land or space has been converted into Engineering Medical/Management institutes and
2. Also for the song of SEZ(exports).
3. Moreover, MSMEs are expected to buy the land at market rates. Sothe land is being very much unafforable.
y Access to Electricity:
1.Inadequate electricity
2. Adverse effect on productivity and competitiveness.
8/8/2019 Challenges and Problems New
9/26
8/8/2019 Challenges and Problems New
10/26
Cont.
y VAT in UP:
1. VAT has been suddenly raised for Transformers, Cables &conductors, switchgears etc have been hiked from 4% to 12.5%.
2. incentive for them to buy these products from other states at CST
rates i.e. 2%.
8/8/2019 Challenges and Problems New
11/26
8/8/2019 Challenges and Problems New
12/26
Cont.
y Payments delayed:
1. By large buyers of MSMEs and even Government/ PSUs; almost heldup during recession.
y Impediments in Exports:
1. In claiming refund of taxes
2. Makes exports uncompetitive
3. Hardly 0.5% of MSMEs are in exports.
y Government/ Public Procurement:
1. In India the public procurement (Central govt.) is less than 1%.
8/8/2019 Challenges and Problems New
13/26
Cont.
y Commodity Crash:
1. suffered heavy losses in imports.
y Access to funds for new projects/ start-ups:
1. loan proposals are not acknowledged or are not disposed; but delayedat branch level.
8/8/2019 Challenges and Problems New
14/26
Cont.
1. Banks continue to discourage Credit Guarantee cover in lieu ofcollateral
2. Banks have deposited more money under SLR/CRR than what isrequired instead of lending
y Interest Rates and service charges:
1. higher charges for all types of chargeable services particularly non-fund based limits such as bank guarantees
2. RBI
instructions not passed out to MSMEs.
y Excess Collateral:
8/8/2019 Challenges and Problems New
15/26
8/8/2019 Challenges and Problems New
16/26
Cont.
y Third party credit rating:
1. Credit Rating requirement under BASAL II for loans portfolio aboveRs. 10 cr has unnecessarily burdened SMEs.
y Taxation:1. Location based Tax breaks create distortions in economy. Have
induced artificial un-competitiveness for MSMEs
2. Stamp Duties
3. FBT is a retrograde step in direction of tax reforms and has proved tobe the biggest nuisance tax
8/8/2019 Challenges and Problems New
17/26
Suggestions to the above issues:
y Earmarking of space in SEZs for MSMEs without export obligations.
y Support collective SME initiatives for distribution of electricity ingeographical concentrations, industrial areas and clusters.
y VAT rates of products consumed by industry should not be tinkeredowing their cascading effect.
8/8/2019 Challenges and Problems New
18/26
Cont.
y Clear instructions need to be issued to Government Departments andPSUs for timely payment with penalty clauses for noncompliance.
y An advertisement campaign for sensitizing buyers as well as auditors
on the provisions against delayed payments.
y Need a comprehensive long-term SME export support promotionprogramme to increase SME participation in exports from currentlevels of 0.5% of registered SMEs.
8/8/2019 Challenges and Problems New
19/26
Cont.
y As promised through the MSMED Act, there is a need to set-aside 20%of all public procurement for Micro and Small enterprises.
y E-procurement should be encouraged.
8/8/2019 Challenges and Problems New
20/26
Cont.
y Invite foreign SME dedicated funds and provide them suitable fiscalincentives for equity providers.
y RBI should constitute a Committee for issuing guidelines on extent of
collateral requirement.
8/8/2019 Challenges and Problems New
21/26
Cont.
y Location based Tax breaks should be immediately revoked
y High stamp duties on transfer of property and on commercialtransactions should be minimized.
8/8/2019 Challenges and Problems New
22/26
8/8/2019 Challenges and Problems New
23/26
Cont.
yMaterial handling Equipments:
AS/RS include rack structure, storage, and retrieval machines, and pick
and deposit transfer station.
y Standardisedpackagingmaterial:
I. Active and Smart Packaging -Technology that controls the oxygenand moisture content in the food packet.
II. Green Packaging -Some of the available green packaging solution in
the market are Polypropylene and High barrier tray, FoamedPolypropylene and High barrier tray etc.
8/8/2019 Challenges and Problems New
24/26
Cont.
y Waste management and Lean manufacturingpractices:
I. Networked material flow.
II. WMC (Waste Management Circle).
III. Defect deduction using Computerised Condition Monitoring (CM).
8/8/2019 Challenges and Problems New
25/26
Quick Facts:
y Indian SMEs providing IT solutions to remain unfazed by US policy onoutsourcing.
y The power shortage and under utilization of the production capacitywould not be any major problem for the SMEs based at Kanpur. This is
to due to the proposal of theII
A to setup the power plant under PPPmodel to serve the problem.
y Indian Government and MSMEs initiative for lean manufacturingimplementation and can get the grant for the same.
8/8/2019 Challenges and Problems New
26/26