The Micro, Small and Medium Enterprises (MSMEs) will be the biggest beneficiary of the recently announced 3 per cent interest subsidy scheme for exporters.
The scheme assumes significance for the sector as credit is the major issue which restricts growth of the segment, which contributes about 45 per cent of the total manufacturing output and 40 per cent of the country’s exports and over 8 per cent to India’s Gross Domestic Product (GDP).
“MSMEs are backbone of the country. Crores of people are employed in this sector. During the time when the country’s exports are continuously declining, giving a solid support to the MSMEs would help in boosting the overall shipments,” Federation of Indian Export Organisations (FIEO) Director General Ajay Sahai told SMEpost.com.
Sahai said that the sector was facing major credit problem.
Sharing similar views, Rafeeq Ahmed, Chairman of Farida Group and Council for leather Exports, said the Interest Equalisation Scheme (earlier called Interest Subvention Scheme) on Pre and Post Shipment Rupee Export Credit for five years is major shot in the arm of MSMEs.
The scheme would be available to all exports of MSME including toys, sports goods, handicraft, readymade garments, paper and stationary and 416 tariff lines or products.
According to experts, the government should ensure credit to the sector at affordable rates besides marketing funds.
It will help them in marketing and branding of their products in the international market.
“The government should ensure better flow of credit to MSEs by minimising risk perception of banks and financial institutions in lending without collateral security,” Ahmed said.
Experts also emphasised on the need to implement all the recommendations of the inter-ministerial committee, set up in 2013, for boosting exports from the MSME sector. It was headed by the then Finance Secretary R S Gujral.
The major recommendations of the Committee were include an additional interest subvention of 2 per cent for those exporters who repay on a timely basis; banks to aim for at least 40 per cent export credit to MSMEs and targets for banks to increase MSME borrowers by 10 per cent annually until 2017.
It had also suggested to enhance budget and scope under MDA (market development assistance)/MAI (market access initiative) schemes; greater focus on brand building and trade fairs; double income tax deduction for marketing expenses.
The sector provides employment to about 80 million persons through 3.6 crore enterprises.
By – RAJIV RAI
Image Curtsey: thehindubusinessline
