Your Views on: Recommendations of the PM Task Force on MSMEs

Following the meeting of MSME Associations last year, the Prime Minister had constituted a Task Force under his Principal Secretary to addresses challenges faced by MSMEs. The Task Force has since submitted its recommendations. Kindly help us bring coherence in national MSME approach by sharing your views on the proposed measures by Task Force. We shall be happy to accord due credit for your contribution in the consolidated report.

    Measures Proposed for Immediate Action

    1 - Stimulus package:

    Extension to MSME related components for one year [e.g. Interest subvention; Refinance facility in SIDBI etc
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    2 - Directed lending:

    Banks to adhere MSE lending targets strictly [ 20% y-o-y growth; 60% earmarking for micro]. A Standing Review Committee under Member (Planning Commission) also proposed [Proposed Implementation/moni-toring mechanism : Standing Review Committee under Member (Planning Commission)]
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    3 - Fund for Micro Enterprises in SIDBI:

    Short-fall in funds earmarked for ‘Micro’ in Banks to go to the proposed Fund for lending to Micro enterprises. [ Proposed Implementation/moni-toring mechanism : Standing Review Committee under Member (Planning Commission) ]
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    4 -Public Procurement by Govt / PSUs:

    20% procurement from MSMEs proposed; Extent of purchase to be reported in annual reports [Proposed Implementation/moni-toring mechanism : Targets achieved to be reported in Annual their Reports ]
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    5 - Off-set policy (defence):

    Foreign vendors to provide Licensed production opportunities to Indian SMEs. A monitoring mechanism proposed under Raksha Utpadan Rajya Mantri with Secretaries (Defence production, MSME, Civil aviation) with heads of defence PSUs. [ Proposed Implementation/moni-toring mechanism : Mechanism under Raksha Utpadan Rajya Mantri with Secretaries (Defence production, MSME, Civil aviation) with heads of Defence PSUs ]
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    6 - Funding for infrastructure/ institutional set-up:

    a. Rehabilitation fund in states for revival of sick units ;

    DICs to re-examine viability of revivable units. Rehabilitation package to be made binding on banks and FIs; RBI/ Finance Ministry to issue required orders [ Proposed Implementation/moni-toring mechanism : Rehabilitation package to be made binding on banks and FIs; RBI/ Finance Ministry to issue required orders ]
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    b. Assistance to MSMEs for adoption of clean technologies

    Rs 1500 cr. allocation mooted Creation of Technology bank/ product specific technology centers [ Proposed Implementation/moni-toring mechanism :Creation of Technology bank/ product specific technology centers ]
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    c. Establishment of business incubators in educational institutes:

    Rs. 1000 cr allocation mooted
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    d. Renovation of existing industrial Estates, upgrdation to townships

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    e. R-engineering and revival of District Industry Centers (DICs)

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    f. Strengthening of NSIC equity for market support of MSMEs

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    g. Upscaling of entrepreneur-ship/ skill development prog.

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    7 - Transition of MSMEs from informal to formal:

    Through graded tax structure of Direct Tax Code and GST; incentives for angel/ CV funds
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    Medium Term Institutional Measures

    8 - New Institution for MSMEs

    A New independent body proposed by taking out some functions of DC-MSME, SIDBI, NSIC for setting up Ind. Estates and administer MSME dev schemes An Expert Group is proposed for working out details-comprising of Member Planning Commission, Dy. Governor RBI, Secy (DFS), DC-MSME, CMDs of SIDBI & NSIC [ Proposed Implementation/moni-toring mechanism :Expert Group proposed for working out details-comprising of Member Planning Commission, Dy. Governor RBI, Secy (DFS), DC-MSME, CMDs of SIDBI & NSIC ]
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    Legal and Regulatory Structures (1~3 years)

    9 - SME exchange

    Should expedite establishment of SME exchange)
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    10 - Factoring

    Workable legal options to be developed for securitization of trade credit receivables & promotion of factoring
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    11 - LLPs:

    LLPs to be given wide publicity
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    12 - Insolvency legislation

    Insolvency legislation should be comprehensively reviewed (to pave way for life after failure and to a)
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    13 - Labour Laws

    Task force has sugegsted comprehensive review of Insolvency provisions (to address issues related to failure and exit)
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    14 - North East and J&K

    Changes in Capital subsidy scheme and enhanced budgetary support
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    15 - J&K:

    Incentives for J&K to be brought at par with NER; Rs. 100 cr fund for rehabilitation package for sick units
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    Final word!

    A

    Do recommendations of the PM Task Force address challenges of competitiveness that MSMEs face?
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    B

    What are the glaring omissions in your opinion?
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