A new report, "The new wave Indian MSME: An action agenda for growth", by CII-KPMG released last week says that India will emerge as one of the leading global economies over the next decade and to make the country's micro, small and medium enterprise (MSME) sector backbone of this economy, we need to make these firms globally competitive. The report comes with some valuable suggestions which I would like to share here with you.

Some important recommendations made in regard to infrastructure include 25% land reservation for MSMEs at all industrial corridors; development of national, regional infrastructure and industry specific clusters equipped with facilities like tool rooms, B2B access and e-platforms; promotion of IT development in MSME clusters and emphasis on cloud computing; improvement of road, rail and air connectivity, and promotion of industry-academia collaboration for R&D and technology support.

On regulatory reform, the study voices for a single comprehensive MSME law for the whole country. In addition, it also suggests the introduction of effective policies to help MSMEs deal with two lingering problems — delayed payment and difficult exit. There are two other important steps the report mention about: development of a national procurement policy for public and private enterprises for specified areas in each sector, and introduction of direct and indirect tax benefits for micro, small and medium enterprises in various ranges and for different periods.

On funding, the report talks about incentivizing debt funding and investments by high-net-worth individuals and funds in MSME segment. For making MSME lending attractive to banks, a number of steps, including separate sub limit for sub sector for MSME for funding, rationalized interest rate for credit rated firms, low-cost credit scheme for micro firms and start-ups, etc. are put forward. In addition, the report also suggests a scheme that can ensure speedy financial assistance for exporting SMEs to scale up operations.

For utilization of the Rs 10,000 cr MSME development fund and the Rs 200 cr MSME technology fund announced in the Budget, the report suggests, among other measures, creation of fund facilitation centers with linkage of industry associations, equity funds, banks, MSMEs, etc while for skill development it suggests — besides upgradation of skill development institutions and promotion of entrepreneurship and innovation — different types of sops, such as on generating additional employment and for employing women and special categories.

I invite your opinions on these suggestions. What more do you think the government should do to make our MSMEs globally competitive?