The Indian manufacturing sector has the potential to elevate much of the Indian population above poverty by shifting the majority of the workforce out of low-wage agriculture. Manufacturing sector is the backbone of any economy. It fuels growth, productivity, employment, and strengthens agriculture and service sectors. Astronomical growth in worldwide distribution systems and IT, coupled with opening of trade barriers, has led to stupendous growth of global manufacturing networks, designed to take advantage of low-waged yet efficient work force of India.
Though the small and medium enterprises (SMEs) are the backbone of Indian economy, most of the SME owners face a lot of problem due to the non-availability of timely and adequate credit at the reasonable rate of interest. In addition, arranging collateral security or third party guarantee is the tough proposition for them. The financing constraints are due to a number of reasons, including stringent policies, legal/regulatory framework, institutional weaknesses, and lack of reliable credit information.
In the upcoming budget, there is an urgent need to raise the global competitiveness of the Indian manufacturing sector and it is imperative for the country’s long term-growth. The National Manufacturing Policy is by far the most comprehensive and significant policy initiative taken by the government. The policy is the first of its kind for the manufacturing sector as it addresses areas of regulation, infrastructure, skill development, technology, availability of finance, exit mechanism and other pertinent factors related to the growth of the sector.
To give a boost to the small entrepreneurs and job creation, the government has doubled the credit guarantee limit for small and medium businesses to Rs 2 crore to help them tide over the liquidity problems. The scheme used to cover only bank loans, but now it will cover loans given by NBFCs (non-banking financial companies) as well.
Governments in other great economies of the world such as USA, UK and China have set up a lot of technology parks for businesses to manufacture their own products & avoid any compromises on the technology front, thus contributing to the economy of these nations. India being a great platform for innovation and technology should take initiative in such activities to set up technology parks which not only provide great opportunities for business but also appreciates the value of innovation and technology.
Some of the prestigious institutes in India such as IIMs and IITs have taken initiative to help build these technology parks and the government should provide them support in terms of funds and recognition so that the abundant potential prevailing in small and medium enterprises of India gets ample opportunities to enhance and grow
Many small and medium scale enterprises prevailing in India have to depend on other manufacturing units which often results in the compromise of quality and unsatisfactory results. If the government were to provide them a location to set up their own manufacturing plants, quality of the products would enhance at a much greater scale and may also prove to be a vital platform for innovation and development of new products. Location to set up a plant is a pre-requisite for a lot of these small scale enterprises that are having permissions and IPRs from the government to manufacture in India but are deprived of land to set up their plant.While the government appreciated the efforts and potential of these enterprises, by increasing the credit guarantee limit to Rs 2 crore, to give a boost to these small organisations, they should also manifest a policy for these small and medium scale enterprises to provide them with a location to set up their own plant so that one day India will become a leader the world in terms of technology and business.
SMEs will be motivated with such moves and ultimately it will help Make in India campaign and employment generation.
(by- Dr Puneet Gupta is the founder & CEO of CleanLife )
Source: Business Standard
