Guwahati: The MSME Export Promotion Council (EPC) has suggested a five-pronged strategy to revive the over 25 per cent micro, small and medium (MSME) units that are struggling to survive in the Northeastern region and give a boost to the existing units and start-ups in the region.
In a study on “Revival and Development of MSMEs in the North East Region (NER) for Inclusive Growth”, the MSME EPC stated that there are around 74,000 micro, small and medium units in the Northeastern Region, far below the potential, but a large number of them are facing crisis primarily owing to lack of timely availability of affordable finance, fast changing technology and inadequate infrastructure.
The study was released by the MSME EPC chairman Dr D.S Rawat. While releasing the study, he said that many start-ups have come up and helped the region in providing jobs, but some of them are in deep crisis in the absence of hand holding by either large units or institutions.
Notably, the eight Northeastern states have less than one per cent of the total MSMEs in India. The manufacturing sector forms 18 per cent of the NSDP (Net State Domestic Product) of the region, while the services sector, being the major contributor, forms 52 percent of the NSDP. Currently, there are 73,889 registered MSME units across the eight states.
The five-point strategy recommended by the study include (i) setting up of high-power committees by the respective state governments to resolve on priority the problems faced by the MSMEs, (ii) creating short, medium and long-term roadmap to for a conducive environment for tapping the untapped potential, (iii) focusing on skilling the manpower, (iv) opening show-rooms at different locations for the products produced by the MSMEs and (v) developing a mechanism to connect the units with research and development centres and global marketing agencies.
The study has also emphasised the need for designing new architecture of development financing revolving around three critical players – Ministry of DoNER, multilateral and bilateral institutions and private players.
In order to improve industry attractiveness, there is an urgent need for an environment that fosters entrepreneurship and drives the economy towards growth and sustainability.
In this connection, Dr Rawat says, “A single window system can easily be implemented at a low cost which will help MSMEs in the state and attract private investment.”
The major challenges identified by the study are geographical, inaccessible hilly terrain, underdeveloped transport, low participation of private sector, poor financial and infrastructure facilities such as roads, railways, health, educational institutions and technology.
Moreover, the MSME clusters are inadequately equipped especially in tool rooms, innovation centres and testing facilities. Therefore, the possibility of collaboration can be explored with companies having innovative infrastructure, research and development institutions, and universities that specialise in specific industry or knowledge areas.
In terms of funding, private sector contributions should be encouraged through debt instruments like bonds, CDs (certificates of deposits), with tax incentives through SIDBI.
The government should also build networks of development service providers that can extend customised solutions to the MSMEs in the areas of technology, product development and marketing techniques, the study said.
Registered under the Companies Act 2013, the MSME EPC has been undertaking state specific, sector wise studies to create awareness for attracting the investment especially in the emerging opportunities, and holding conferences, workshops and training sessions for micro, small and medium sectors.
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There has been an overall increase in the number of MSMEs established in the last 10 years in the Northeastern Region. However, the percentage of MSMEs as compared to total registration in India has declined.
It may be mentioned that the Northeastern region comprised only two per cent of registered MSMEs as per the SSI registration till 2006, which declined to 1.34 per cent during EM (entrepreneurs memorandum) registration as recorded between 2007 and 2015. Further, only 0.77 per cent of units are registered from NER.
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