A draft on national policy for micro, small and medium enterprises (MSMEs) has been released by the Policy Division at the Ministry of MSME for all the stakeholders, industry associations, MSME units and the general public to provide their comments/suggestions by 28th February 2022.
This draft of policy document on MSME aims to promote competitiveness, technology upgradation, infrastructure, cluster development, dedicated credit, procurement of products & financial assistance to MSME.
Pressing upon the need for a new MSME Policy, the policymakers said, “There is a lack of convergence and synergy among various stake holders to enhance MSME productivity to the best of their ability. Proper mobilization, awareness and objective oriented actions need to be identified.”
Legislative and regulatory framework for MSMEs in India is quite complex and varies from state to state. It is largely mixed with industry as a whole and only couple of states have exclusive framework of codes, regulations and other rules.
Further, access to soft loans, risk mitigation funds, easy access to raw material and marketing facilities, existing method of dispute resolution are not industry friendly.
The purpose of the draft policy is to bring together a comprehensive frame-work of strategies and actions for suitable adaptation and inclusion in the state level policies.
Some of the key highlights from the draft policy are:
- Special cell should be created in DIC/DLMFC to coordinate with DAY NULM (National Urban Livelihood Mission) and National Rural Livelihood Mission (NRLM) with local governments in urban and rural areas.
- Micro enterprises should be given special attention and due representation in DLMFC/ LLMFC.
- Each state should have its own regulatory system exclusively for MSMEs.
- Composition of facilitation council must be reviewed to widen its outreach and access to all stakeholders.
- Most of the states are having one FC at the state level which is not adequate to deal with the number of cases being filed and delay and pendency are common feature. To deal with the situation there is need for establishing more FCs and if possible/feasible, an FC should be set up in each district.
- The ambit of Facilitation Council needs to be extended to Medium enterprises also.
- Promote awareness on Samadhaan among MSE borrowers.
- Under the Insolvency and Bankruptcy Code, 2016 MSME dues should be given priority over all other unsecured payments after settling dues of employees when a company goes into liquidation or approaches NCLT.
- Decide disputed cases within 90 days to improve liquidity of MSMEs and minimize the incidence of NPA.
- Many states are having different Laws/ ordinances to regulate and promote MSMEs. There is no uniformity in these States’ Laws. The Central Govt may prepare a model law and circulate among states. The adoption of the model law by the state will bring uniformity among all states.
- The policy makers are of the opinion that the document needs wider dissemination, debate and feedback from stakeholders to firm up a national policy for follow up at intergovernmental level.
Various committees were involved to places forward a range of issues for suitable resolution, although recent actions have tried to address many of them through notifications from time to time and follow up actions, as mentioned in the tentative document.
However, it is recognised in the draft policy that there is a need to systematically look into these issues to form a dynamic policy by GoI to take actions and promote follow up at state level to address specific barriers in the growth of MSMEs.
The draft policy also recommends development of State Policy on MSME in line with the National Policy on MSME.