Over the past three years, registration of Micro, Small and Medium Enterprises (MSME) units has gone up from 16,000 to three lakh. The sharp increase in the number of registered units is being ascribed to the online registration facility that was introduced by the government in 2016. Speaking to The Sunday Guardian, Rajnish Goenka, chairman, MSME Development Forum, said that it is a big success because until now, manufacturers have largely remained reluctant to get registered.
“The scenario has changed because now people are attracted by government benefit schemes and can see that getting registered is in favour of their businesses. Until now, evading tax was known to be a major reason for low registration. The culture of bribe for an entrepreneur who was willing to get his/her company registered was discouraging. Entrepreneurs turned into thieves because they were evading tax though they did not want to evade it. Entrepreneurs had to pay at least Rs 20,000-Rs 30,000 to get their company on the roll. But now that has changed. MSME is a crucial sector for the Indian economy and still most of it is being run unregistered, but there is progress now,” said Goenka.
The sector contributes 8% to GDP, 45% of the industrial output and 40% of exports through more than 57.7 million enterprises employing 120 million people. Diverse in terms of size, technology and location, MSMEs manufacture a range of 8,000 products, ranging from grassroots village industry to hi-tech components for satellites.
Goenka, former National Convener of BJP’s Micro and Small Industry Cell, said, “As much as 90% of entrepreneurs are in the MSME sector. While the government has introduced schemes to benefit various stakeholders, working through bureaucracy is tough. It takes time even for the best of schemes to percolate down to the grassroots after weaving its way through bureaucratic corridors. On the other hand, entrepreneurs are generally one-man armies with limited finance and human resources, which is why effective government outreach becomes a crucial role.”
Stating core challenges for a small-scale enterprise, Goenka said, “Among technological and financial shortcomings, a practical challenge for small entrepreneurs is awareness about the government’s schemes. The notifications are generally written in high English that a not-so-educated entrepreneur may not be able to understand. One way to promote government schemes is to advertise them in local languages.”
Speaking about the effects of demonetisation on the MSME sector, Goenka said, “It is true that the MSME sector was the worst hit by demonetisation. In small-scale industries, business is largely done in cash, so entrepreneurs had to go through a hard time. MSMEs have taken a harsh hit. But I am sure that the sector will find its way back. Growth will be slow, but the current government is committed towards entrepreneurship, so we can see this sector grow. Specifically in the farming sector, the youth needs to realise its scope and the number of opportunities that are coming on the agricultural start-up scene.”
Goenka said, “Developed nations like Germany etc., have done exceedingly well in growing their MSME sectors. However, in India, our social conditions are different. Therefore, we must learn from their best practices and improvise according to our challenges.”