Success of Govt. Policies: Yet to be Endorsed by MSMEs

By Faiz Askari , Founder Editor of SMEStreet

NEW DELHI: In our bid to establish a direct engagement and connect with entrepreneurs, we at SMEStreet interact with several entrepreneurs across various parts of the country. This exercise is mainly driven to understand the real issues that these MSMEs are facing. Policies and schemes are getting drafted for the upliftment of MSMEs.  But ultimately the upliftment is yet to be endorsed by the entrepreneurs themselves.

If we look at the New Procurement Policy, this is one of the most sought after and well hyped policies designed for MSMEs. But the on ground review of this policy shows that we face really tough challenge in getting any specific examples of MSME beneficiaries of this policy.

However, according to the New Procurement Policy, 20% procurement from MSMEs is the sole agenda of Government. But somehow PSUs who are suppose to procure from MSMEs are unable to achieve their targets. Why is it happening?

We analyzed that there are several gaps in the bidding or tendering process. There are complaints that some PSUs even gets innovative, just to prevent MSMEs participate in the Government tenders.

However, there are published media reports which highlights malpractices in tendering processes. In a country like India, we must understand and accept that corruption is still the one of the biggest hindrances of growth.

MSME entrepreneurs often points that they are getting harassed through repeated tendering even when repeatedly he quoted lowest in the tenders. Though these things can be part of the tendering process or might be exceptional aspects of the procedures.

Another common excuse that PSUs often give while showing the under achieved target of Procuring from MSMEs is about they didn’t get a chance to come across any deserving MSME for the respective project. Well, this excuse is valid, but then this also points an argument on efficiency of Govt’s overall approach towards including MSMEs in the development of the economy.

Replying to a Parliament question, Mr Haribhai Parthibhai Chaudhary, Minister of State for MSME Ministry said, “PSUs are finding difficult to achieve 4% procurement target from MSEs owned by SC/ST entrepreneurs due to less participation of MSEs  owned by SC/ST entrepreneurs in procurement  process for supply of  goods and  services.”

During the year   2015-16, only 61 CPSUs have been able to achieve 20% target of procurement from Micro and Small Enterprises.

Moreover, this analysis puts a strong question mark over how the 20% mandatory target of the procurement Policy can be achieved?

My observation says, that there has to be a multi pronged action plan needed in this. For example, capacity building, quality monitoring and so on must be implemented at a grass root level. Programs such as ZED Certification must get proper penetration. There are sincere efforts from the Govt on this front but actually the adoption of these programs should be widespread. If the MSMEs are not showing the adoption, then it must be analyzed why is it happening.

Secondly and most importantly, there has to be a penalty clause for PSUs in order to ensure the best utilization of the Procurement Policy. SMEStreet has written about this earlier as well, and would like to re-emphasize that PSUs must become properly answerable towards the procurement from MSMEs.

We have to understand that Small entrepreneurs must escalate from their existing level. There escalation holds key for country’s overall economic development.

MSMEs’ contribution in employing Indian talents is phenomenal, in overall exports is huge, but their contribution in country’s GDP is still low. This situation must be considered as an opportunity. There are sincere efforts by the government, but a lot has to be done in terms of proper execution.

Ministry of MSME is spearheading the mandate of bringing Indian MSMEs on to the main front of Economic growth. Policies and incentive programs are well drafted and well designed, but a strong introspection is still needed to examine the ground level realities so that the MSME upliftment must become visible to all. Remember, their prosperity holds key for country’s economic growth.