‘State governments also need to enforce 20% procurement quota for SME sector’
The Indian small and medium enterprises are second to none but they have to sustain standards and be recognized as brands to reckon with, says MSME Secretary Anup Pujari in an exclusive sit down interview with SMEpost.com Editor K R Sudhaman.
Pujari dwells on key challenges facing the sector while highlighting its role in growth of the Indian economy. He has made a strong pitch to various state governments to enforce 20 per cent procurement policy for small enterprises. Edited excerpts:
Q: MSMEs are not aware of several privileges and legal protection that government has provided like mandatory payment within 45 days to safeguard their interest. How do you propose to tackle this issue?
A: The question is in two parts. The first one is on whether the issue of procurement from MSMEs and whether they are getting priority and the second one is whether MSMEs are getting payment in time.
I invite you to look at public procurement order of 2012. It is applicable only to government departments, Public Sector Units and other government entities. We do hope that state government will also follow this. There are 356 items which shall be procured. The law says that at least 20 per cent procurement by any Central Government entity will be from MSMEs.
Regarding the second part of your question on payment, this pertains to everybody. On delay of payment, it is Section 19 of MSMED Act, where every state is supposed to have MSME facilitation council. The facilitation council will take up the question of delayed payment. Also the entities will have to reflect in their annual statements, regarding the amount due to MSMEs.
This is an issue which has to be tackled through persuasion because at the end of the day, if certain payments are not made by purchaser then it will become a breach of contract and a judicial case will be filed. Government can only persuade, try to cajole them and also by bringing their defaults into public domain.
But there is yet another issue. MSMEs need to build a brand for their products. This takes time. Creation of good quality among MSMEs is equally important. Our MSMEs are second to none but emphasis should be on constant improvement of quality so that there is greater demand. Lean manufacturing system under MSME actually tries to bring down not only cost of the production but enhance the quality of the product as well.
Q: You talked of quality, Prime Minister too talked of ‘Zero Defect Zero Effect’. How do you think MSMEs could be made to pursue this when MSMEs have the problem of skilled manpower?
A: Again, there are two parts to your question; one Prime Minister is talking about ‘Zero Defect Zero Effect’ and the second part about skill requirement. Both of them can be related and both of them need not be related. Under ‘Zero Defect Zero Effect’, we are trying to partner with Quality Council of India. QCI has already done a pilot work with Department of Industrial Policy and Promotion (DIPP) whereby under ZED system, they are trying to grade various MSMEs. First data will be collected and on the basis of data, enterprise will be rated whether they are of gold quality or some other quality.
‘Zero Defect Zero Effect’ essentially, means that they are adopting green methods. It also means whether they are trying to grade the quality products. This cannot happen in a day and this can happen only over a period of time. We are trying to look at how our Ministry can scale up the initiative started by government to improve quality control among MSMEs.
Regarding skill requirement, all sectors of the economy are facing shortage of skilled people in the country. The Ministry of Skill Development is looking into this aspect; they are promoting Skill Development among MSMEs as well. Our Ministry is also taking steps through the office of Development Commissioner. We are doing skill mapping of every district in the country on what is the type of skill available in every district. This is basically a starting point to develop skills at district level.
This will be base level data and beyond that the sector skill council will take steps to promote skill development.
Q: UAM has recently been launched by MSME Ministry. You have reached one lakh registration in three months, which is very impressive, but there are five crore MSMEs in the country and how do you propose to register all of them?
A: The reason behind UAM is to make the registration process simpler. Our aim is to get 100 per cent of the MSMEs registered but there is no compulsion for anybody to register. We are trying to tell MSMEs that it is a simple online process requiring no fee and no document. The fact that 1 lakh have registered so far in a short span of three months is good. Through this, we will be able to build a database on MSMEs. This is only a starting point, which will help in eliminating fake companies.
Registering under UAM will not attract any penalty and from September 18, 2015 onwards, when this UAM was launched, government benefits will be available not only to UAM registered MSMEs. Government benefit will also continue to be available to all those registered under the earlier programme of SSIs, M1 and M2. We will also depute officers to go to those states where registration is slow to speed up the process.
Q: How do you propose to give thrust to MSMEs in view of huge job creation potential?
A: I list out four specific things that are being attended to. Change is a constantly evolving thing, so we have to constantly work to improve. So, new policy is not a one-time affair. It has to happen continuously.
So the first thing is we have brought in a Bill to Amend MSMED Act to increase the investment caps in MSMEs. We also propose to introduce index linked investment caps and the Bill is now before Parliament. The Parliamentary Standing Committee has supported our entire proposal.
Secondly, on Nov. 23, Finance Minister had a meeting with all public sector CEOs on implementing various MSME schemes. We have sensitized them on MSME schemes and we are also exploring if these schemes can be tweaked further.
Thirdly, we have allocated more funds for MSMEs. This is essential for funding of schemes such as Prime Minister Employment Generation Programme (PMEGP), Capital Subsidy Scheme and so on.
Fourthly, DIPP has announced technology acquisition and development fund for MSMEs to encourage technology acquisition. Government proposes to provide some subsidy.
Ends
